ACCC Releases Report on Private Health Insurance Industry
Friday 23 October 2015 @ 9.30 a.m. | Legal Research | Trade & Commerce
The Australian Competition and Consumer Commission (the ACCC) has released a Report on the private health insurance industry, highlighting concerns about the impact of complex information on consumers and the market.
Background
The Report is prepared in compliance with an order agreed to by the Australian Senate, requiring the ACCC to provide a report on:
“… any anti-competitive practices by health insurers or providers, which reduce the extent of health cover for consumers and increase their out-of-pocket medical and other expenses.”
The report covers the 2013-14 reporting period and aligns with the ACCC’s 2015 Compliance and Enforcement Policy which identifies competition and consumer issues in the health and medical sectors as a priority.
Aim of the Report
The report examines whether there are particular problems relating to information provision about private health insurance policies and the impact on consumer behaviour.
Report Observations
The ACCC report contains three key observations:
- There are market failures in the private health insurance industry which reduce consumers’ ability to compare policies and make informed choices about their future medical needs;
- Existing regulatory settings can change consumers’ incentives in purchasing health insurance. As insurers respond to market demands for affordable policies there are greater risks of unexpected out-of-pocket costs for consumers; and
- Current practices by some insurers are at risk of breaching the consumer laws.
Consumer Complaints
A recent article published in ABC News reports that the ACCC found the complexity of the system was central to most consumer complaints:
“A range of factors contribute to this complexity, including regulatory settings, the sheer number of policies available, the range of benefits and exclusions, preferred provider arrangements, policy variations and differing terminology between funds which makes comparison difficult.”
The Preferred Provider issue and the fund owned clinics were both the subject of comment in s 7 of the Report:
“… 7.1 Preferred providers concerns were raised by a number of industry associations that the quality of service provided to consumers is being compromised. This is as a direct result of:
- consumers being led to believe that preferred providers offer a better service or an exclusive product when this is not necessarily the case
- consumers being directed to preferred providers because the service may be cheaper but the practitioner may not be as qualified or offer the appropriate quality of service that the consumer requires.”
Reaction from the ACCC
Commenting in a recent ACCC Media Release, the ACCC Deputy Chair Delia Rickard said:
“The ACCC is concerned that the complexity of private health insurance policies can affect consumers’ ability to make informed decisions about the policy that best suits their needs. Whether a consumer is purchasing health insurance for the first time, or reviewing and renewing a policy after many years, they have to navigate through a range of issues to make an informed decision. Consumers may encounter significant difficulty in determining what a procedure will cost and how the relationship between their insurer and the relevant practitioner or hospital will affect this cost. It is in the interests of both consumers and industry to be as clear and transparent as possible so that consumers who are purchasing insurance can make the best decisions about their level of coverage. In line with the ACCC’s current focus on the health and medical sector, the ACCC will be closely reviewing some practices in the health insurance industry to address concerns regarding incomplete policy information that are not only confusing but also misleading.”
Comment from the governing body
In a recent smh.com.au article, it was reported that the Chief Executive Michael Armitage of Private Healthcare Australia said of the ACCC’s Report:
“… if the ACCC believed there was a breach, it should have taken action against those companies. If no action has been taken it is unfair to smear the industry with unsubstantiated allegations."
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Sources:
ACCC report on the private health insurance industry – ACCC Release MR 198/15
ACCC Compliance and Enforcement Policy
Private Health Insurers: ACCC Report and supporting information
Article from abc.net.au
Private health insurers may be breaking the law by varying customers' policies: ACCC - Article from smh.com.au
