Regulator wants more consumer-friendly PHI

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The ACCC has released its annual report into the private health insurance industry.

The ACCC is required to deliver the annual report under a 2003 Senate order.

According to the regulator, the industry should make its products more consumer-friendly by providing reliable and transparent information about product features and changes to private health insurance policies.

“Consumers rely on private health funds engaging with them honestly so they can avoid unexpected out-of-pocket costs and make informed decisions about the policies they choose,” said ACCC acting chair Delia Rickard.

“However, we’ve found it’s currently very difficult for consumers to properly compare and choose policies for their needs, meaning many are shocked when presented with expensive bills for medical services and products they thought they were covered for.”

The ACCC said it also found consumers are shifting to lower-cost policies with greater exclusions or a higher excess, or simply dropping their cover, in response to higher premiums.

It report found 40 percent of hospital policies had exclusions in 2017. The compared with 38 percent in June 2016. There was also an increase in hospital policies with an excess or co-payment -  up from 82 percent to 83 percent.

“Consumers are increasingly questioning whether the benefits of private health insurance offset the premium increases - a trend that should concern the industry,” said Ms Rickard.

“We believe private health insurers are capable of providing consumers with significantly more detail about extent of coverage under their policies. Clear and prominent disclosures are one measure that can rebuild waning trust in an industry where complaints increased by 30 per cent last financial year.”

This year's report has coincided with reforms announced by health minister Greg Hunt. The reforms include a new system of simplifying the presentation of all private health insurance policies through a system of categorising - as gold, silver or bronze. The industry is also working with the Department of Health to gain a better understanding of the extent to which consumers are being charged 'administration' or 'booking' fees.

According to the ACCC, the amount of hospital benefits paid by private health insurers per person increased by 5.2 percent in the past year, along with a 3.4 percent increase in general or extras benefits per person.

Average out-of-pocket expenses incurred by consumers from hospital episodes decreased by 0.8 per cent, but increased by 2 per cent for general or extras treatments.