Complaints about private health insurance declined by 21 per cent in 2017-18 but have grown steadily over the past ten years, according to the Ombudsman's 2018 State of the Health Funds Report.
There were 4,553 complaints in 2017-18, down from 5,750 in 2016–17, with a similar decline in the number of consumer information enquiries. Complaints in 2017-18 fell to around the same level in 2015-16.
Complaints have steadily risen from over 3,000 at the start of this decade.
The report says the Ombudsman received 2,956 enquiries in 2017-18, of which 65 per cent were received through the consumer website - privatehealth.gov.au.
The significant spike in complaints in 2016-17 was driven by a specific IT issue at Medibank.
In 2017-18, the top three complaint issues were broadly consistent with previous years, relating to benefits, membership and service.
The main complaints about benefits concerned hospital cover with unexpected exclusions and restrictions.
"Some basic and budget levels of hospital cover exclude or restrict services that many consumers assume are routine treatments or standard items," said the Ombudsman.
"The Office anticipates that the number of complaints about benefits will reduce significantly in future years with the implementation of private health insurance reforms in 2019, which will standardise clinical categories and give consumers more certainty about their benefits."
"Delays in benefit payments and complaints about insurer rules that limited benefits also represented a significant proportion of complaints received," it added.
Complaints concerning membership "typically related" to issues such as processing cancellations, payment of premium arrears, or delays in the provision of transfer certificates.
Service complaints, which the Ombudsman said are usually due to a combination of unsatisfactory customer service, untimely responses to simple issues and poor internal escalation processes, declined significantly in 2017-18 reflecting the resolution of Medibank's IT issue.
The Ombudsman highlight the implementation of reforms designed to simplify private health insurance for consumers, including the categorisation of all policies as 'gold, silver, bronze or basic'. It said its website, privatehealth.gov.au, is being redeveloped as part of the reforms.
Insurers returned from 80 per cent to over 90 per cent of premium revenue as benefits with management expenses sitting at an average of around 10 per cent.