Health fund premiums to be slashed by up to 10 per cent for young Australians

EXCLUSIVE: Escalating health fund costs will be reined under a new government plan that is also set to slash the costs of funds for the under 30s.

Health fund premiums for people under the aged under 30 will drop by up to 10 per cent. Picture: Supplied

HEALTH fund premiums for people under the age of 30 will drop by up to 10 per cent under a major overhaul of private health insurance to be announced by the government tomorrow.

And premium rises for those aged over 30 will be bought back closer to the inflation rate with the government planning to slash by hundreds of millions of dollars the amount health funds pay for prostheses like hip and knee replacements.

Rebates for a large range of unproven natural therapies will be banned including: Alexander technique, aromatherapy, Bowen therapy, Buteyko, Feldenkrais, herbalism, homeopathy, iridology, kinesiology, naturopathy, Pilates, reflexology, Rolfing, shiatsu, tai chi, and yoga.

The government will also try to end the confusion surrounding the choice of the best health fund policy by revamping its private health insurance ombudsman website and giving the ombudsman more staff.

The ombudsman’s website will be upgraded to ask people what they want to be covered for and what their income is and suggest all the policy options from every health fund.

Health fund broker websites like iselect and Compare the Market which currently claim to do this demand commissions from health funds and don’t offer consumers all the options.

RELATED: Junk health fund policies may survive reforms

Health fund premiums for people under the aged under 30 will drop by up to 10 per cent. Picture: iStock

Under the changes:

* People aged under 30 will get a premium discount worth 2 per cent per year for each year they belong to a health fund before they turn 30, worth up to a maximum 10 per cent.It will phase out by the time they turn 40.

* Health fund policies will be classified as gold, silver and bronze and have to meet certain standard coverage conditions. The minimum requirements for each category of cover will be finalised during 2017–18.

*Basic entry policies (so-called “junk policies”) that only cover treatment in a public hospital will continue because the thousands of people with these policies would have faced a 16 per cent premium rise to move up to the next level of cover if they were scrapped.

MORE: How public hospitals are raising your health fund premiums by $330 a year

People aged under 30 will get a premium discount worth 2 per cent per year for each year they belong to a health fund before they turn 30. Picture: Supplied

*There will be a mental health safety net that will provide cover for unexpected mental illness. Patients with limited mental health cover will be able to upgrade their cover to access in-hospital mental health services without serving a waiting period.Insurers will be prevented from applying limitations on the number of mental health sessions or treatments a patient can access.

*The price health funds pay for prostheses like hip and knee replacements will be slashed by $1 billion over the next four years. In February 2018 the cuts will save $188 million,there will be further cuts in 2019 saving $110 million.The industry says the cuts will be only $300 Million.

Health funds have pledged all savings they make as a result of paying less for hip and knee replacements and other medical devices will be passed on to consumers in the next premium rounds announced April 2018 and April 2019.

*A new rural health product will see health funds offer travel and accommodation benefits under hospital cover to make private health insurance more attractive for people living in rural and remote areas.

*Eight in ten health fund members opt to pay an excess to lower their premiums and Health Minister Greg Hunt will lift the cap on these excesses from $500 to $750 for singles and from $1000 to $1500 for families.

The $1 billion in savings over four years is expected to cut premium increases by about 1 per cent a year, according to calculations by PHA Chief Executive, Dr Rachel David.

Health funds have been paying prices for medical devices that are 2-5 times higher than prices paid by public hospitals driving up health fund premiums.

“The Federal Government should be commended for tackling the corruption, rorts and kickbacks that over time became a feature of this system, leading to poor outcomes for consumers in terms of both cost and safety,” she said.

Australian Medical Association president Dr Michael Gannon had been campaigning for an end to junk policies that only covered people for public hospital care.

He now says he can live with junk policies as long as people understand how little they cover.

He has welcomed the mental health safety net.

The number of young people looking to join health funds has plunged by a third in the last five years in a move that threatens to further drive up skyrocketing premiums and the discounts are designed to entice them to sign up.

They are young and healthy and less likely to claim so if more young people join it could lower pressure on premium rises.

Health fund membership has been falling by around 10,000 people a month as people drop their cover because of premium rises many times the inflation rate.

Health Minister Greg Hunt’s policy changes are designed to arrest that.