Growing unease over categorisation process

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Growing unease in the industry over the process being used to set minimum requirements for categories of cover.

Health minister Greg Hunt announced the categorisation of private health insurance products last year as one of a raft of reforms designed to simplify the product and address growing concern over affordability.

Under the reforms, the government will introduce four categories of hospital products – Gold, Silver, Bronze and Basic – and three categories of extras products – Gold, Silver and Bronze.

The reform is designed to simplify private health insurance and provide consumers with greater certainty about the services covered by each type of product.

Its scheduled implementation is 1 April next year with the 'minimum requirements' for each category of cover meant to be finalised by the end of June - less than six weeks away. 

The Department of Health is developing its proposed approach to the 'minimum requirements' with the help of an external consultant. It is also meant to be working in consultation with industry and the Private Health Ministerial Advisory Committee.

The industry has become increasingly concerned about the approach being taken to developing the categories. The specific concern is that a poorly managed or rushed process could result in people unwittingly having their level of cover downgraded when the categories are implemented. This might have the effect of exerting downward pressure on premiums but only by categorising policy-holders into lower levels of cover.