Groups back reforms but differ on detail

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A mixed response from organisations to the legislation implementing reforms to the private health insurance sector.

Submissions to the current Senate inquiry show overall support for the intent of the reforms announced by health minister Greg Hunt in October last year but differences on some key measures.

The reforms include allowing premium discounts of up to 10 percent for people aged under 30, categorising all policies by level of cover as gold, silver, bronze or basic, strengthening the powers of the Private Health Insurance Ombudsman by giving it the power to inspect and audit health funds, and allowing insurers to cover travel and accommodation costs as part of a hospital product.

The AMA said it believes the refoms "provide a long overdue opportunity to bring much-needed transparency, clarity, and affordability back to the private health sector."

It backs the categorisations policy and the adoption of standard clinical definitions but calls for greater clarity on aspects of its implementation, including what it will mean for patients with cancer where a surgical intervention may be at a higher insurance category than ongoing treatment, such as chemotherapy or radiotherapy.

It also says the new one-page descriptor of policy's inclusions should only include fully-insured items and not treatments where cover is limited by restrictions or exclusions. 

On the aged-based premium discount for people under 30, which is being opposed by two consumer representative groups, the AMA does not express an explicit position but does caution against any move with the potential to undermine community rating.

The Medical Technology Association of Australia has used its submission to restate its concern over the categorisation of all products.

The association says it supports the intent of the reform, which is to simplify product comparison and choice, but says the exclusive inclusion of many procedures in the 'gold' category could actually result in more people exiting private health insurance.

"At the very least it will result in many Australians paying more for services for which they are currently covered," it says.

It points to orthopaedic procedures such as joint replacements, weight-loss surgery, insulin pump therapy for diabetics and chronic pain management.

"The end result of such recategorisation will be a substantial number of Australians in need of urgent medical treatment not receiving it in a timely or effective manner, while the financial situation of insurers would be stable or enhanced," it says.

Private Healthcare Australia says it supports the reforms and uses its submission to challenge some of the arguments against the aged-based discount and any threat to community rating.

"Market research shows there is pent-up demand for PHI in people aged under 30 and the age-based discount will help put private health cover in the reach of younger people," it says.

"This is particularly important as people under 30 often need preventative dental care, treatment of sports injuries and cover for mental health problems treated in hospital, all things which are difficult to access without PHI.

"Rebalancing PHI membership with younger people will also assist in keeping downward pressure on premium increases."

It points to market research showing the discount would make two-thirds of existing policyholders aged 18-30 more likely to maintain their private hospital insurance and 57 percent without cover more likely to take it out.

According to the Australian Prudential Regulation Authority, around 45 percent of people aged 30-34 have private health insurance compared to just 30 percent of those aged 25-29.