Private Health Insurance in Australia: Legislations, Policies, and Recommendations

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Contents
Introduction.................................................................................................................................................2
Insurance in Australia..................................................................................................................................2
Legislations on insurance.............................................................................................................................6
Recommendations.......................................................................................................................................7
Conclusion...................................................................................................................................................8
Index............................................................................................................................................................8
Bibliography................................................................................................................................................9

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Introduction
Private Health Insurance Act of 2007 and Private Health Insurance Act of 2015 are the
legislations which primarily govern the private health insurance. Health insurance of the private
sector is administered by Department of Health with Australian Prudential Regulation Authority
(APRA) overseeing the activities of the Health Department. When consumers complain, their
complaints are usually handled by the Private Health Insurance Ombudsman. The ombudsman
usually sits within the office of the Commonwealth which also funds the annual reports. Issues of
competition in the health insurance are dealt with by the Australian Consumer and Competition
Commission (ACCC) (White et.al, 2014, p. 68).
Insurance in Australia
Australia has a mix of private and public health care. Public health care is financed
broadly by the government such as pharmaceutical benefits scheme, public hospital, and
Medicare. Some insurance covers are funded by individuals from their pockets, private health
insurance. Private health insurance is not mandatory, and Australians have access to subsidized
medical care and free treatment in public hospitals. Under Medicare, private insurance cover is
not mandatory In Australia, two types of private health insurance policies exist, that is the private
and ancillary. The private insurance covers a person who goes to the hospital for general
treatment, while ancillary covers other ancillary treatment like dental, ambulance and
physiotherapy. Private insurance can be dated back to the 19th century where friendly societies
formed to contribute a fee and members got a range of medical services (Burling et.al, 2012 p.
445).
As a person's health needs change as they become older, so does the health insurance
cover. In Australia, over 30 insurances have over 3500 distinct policies, which depend on where

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a person lives and their circumstances as an individual. Every year, insurance covers tend to rise.
In health insurance policies insurers include the terms and conditions stating that the prices may
change at any time, although one will be notified when such changes take place. One has the
right to switch policies when changes have a detrimental change to them. By law, one is allowed
to switch insurers without any additional costs.
The private health insurance covers expensive treatment for patients in public hospitals. It
also provides patients with more options that like choosing a surgeon or a specialist. The private
insurance is also mostly bought because it has incentives from the government and responds to
taxation policies. Private health insurance is not compulsory. The choice no to purchase,
however, will affect a person's ability to access insurance of choice and the tax obligations.
Medicare levy Surcharge is the tax imposed on high-income earners without a prescribed level of
private insurance. This is distinguished from Medicare Levy. Many Australian consumers don't
incur the Medicare levy surcharge.
11.4 million Australians had the private cover by March 2017, according to APRA
statistics, with another 13.5 million having the ancillary cover. This represents 45.6% and 55.5%
of the population respectively. Private medical care is becoming complex ad different;
restrictions, exclusions, and co-payments are applicable. This has made consumers have a
difficult time in choosing which cover suits them best. Products offered by insurance companies
are many, and the number is not clear. The report by the ACCC senate if 2014-2015 estimated
45,000 private insurance products to exist. The Ombudsman estimated the product to be 27, 281
in 2017. The government usually advises consumers to compare products and pick the one that is
most suitable.