Comprehensive Report: Australian Private Health Insurance Reforms 2017

This report provides a detailed analysis of the 2017 private health insurance reforms implemented by the Australian government. It examines the reforms' background, objectives, and the timeline of their implementation, including key dates and actions taken. The report delves into the critical aspects of the reforms, such as changes in the prostheses rules, the establishment of advisory committees, and legislative amendments. It also explores the impact of removing policy restrictions, improved consumer protection, and the introduction of standardized product categories. Furthermore, the report discusses the amendment rules of 2018 and the implications of the reforms on various aspects of health insurance coverage, including discounts for younger people, mental health treatment, and the removal of benefits for natural therapies. The report concludes with an overview of the reforms' impact on consumers and the healthcare landscape in Australia. The content is intended for students and researchers interested in healthcare policy.

Running head: PRIVATE HEALTH INSURANCE 2017 REFORMS
PRIVATE HEALTH INSURANCE 2017 REFORMS
Name of the student:
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1PRIVATE HEALTH INSURANCE 2017 REFORMS
Executive summary:
Last year in the month of October, the Australian government had announced a series of
reforms or changes in the healthcare policies in order to make them more affordable for the
Australians. This was introduced with an intention to make medical benefits accessible to all
citizens and ensure there is no medical or health related issues for the citizens.
The following report will highlight the different aspects that are associated to the
changing reforms. The description as well as the background of the reform will be studied in
details. The mechanisms and the compliance issues associated with the implementation of the
reform change will be studied in details in the following paragraphs. By the end of this report,
the reader will be able to have an in depth idea of the recent changing reforms in the health
insurance sector. The different stages of the life cycle of the reforms that are to be implemented
in the healthcare industry in Australia will be discussed in details in the following paragraph. By
the end of the report, the reader will have a clear understanding of the different aspects of the
reform implementation.

2PRIVATE HEALTH INSURANCE 2017 REFORMS
Table of Contents
Introduction:....................................................................................................................................3
Critical analysis of the reforms:.......................................................................................................3
Timeline for implementation:......................................................................................................4
Factsheet for the reforms:............................................................................................................7
Private health insurance reforms: Amendment Rules 2018:.......................................................8
Impact of removing the policy restrictions:.................................................................................9
Improved protection for consumers and terminating the policies:..............................................9
Legislative amendments:...........................................................................................................10
Low priced health insurance products in the private segment:..................................................11
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13

3PRIVATE HEALTH INSURANCE 2017 REFORMS
Introduction:
Health Insurance can be defined as a kind of insurance which provides overall medical as
well as financial coverage for the policyholder in case of any medical emergencies. According to
the kind of policy owned by the policy owner, the different expenses associated to the treatment
of critical diseases, surgery expenses, hospital fees etc. are sponsored by the healthcare insurance
company.
In Australia, there are different health insurance companies that have different kinds of
health insurances available for students, senior citizens and other category of consumers that
offer great benefits for the users. In Australia, almost all the citizens including students, senior
citizens are covered for any medical illness under the healthcare division. Users can also
eliminate the private healthcare divisions in order to give themselves the provisions of a wider
range of healthcare insurance options. The two most important decisions of the healthcare
insurances, which are general treatment as well as hospital and the recent reforms that the
Australian government has implemented for the benefit of the Australian citizens, will be
discussed in details in the following paragraphs.
Critical analysis of the reforms:
Recently the Australian government has introduced certain reforms in order to make the
health insurances more affordable for the consumers. The analysis of the reform requires it to be
explained in a series of steps (Flahiff, 2014).

4PRIVATE HEALTH INSURANCE 2017 REFORMS
Timeline for implementation:
Different decisions were taken and action were performed by the Australian government
to implement the change in the reforms in the healthcare insurance. The dates as well as the
action taken on those dates are described in a tabular format given below:
Date Actions performed.
October, 2017
Prostheses Rules that were created reduced the
revenues by $188 million per annum from the
year 2018 and another expected $115 million by
2020 (Preker, Lindner, Chernichovsky &
Schellekens, 2013)
January, 2018 Ministerial Advisory Committee was established
on costs that were Out-of-the-Pocket.
February, 2018
Most of the benefits, around 80% of the total
benefits, that were listed in the Prostheses List in
the year 2018 were reduced. There was around
50% degradation in the performance of the
superior clinics in hip as well as knee implants.
Superior Clinical Performance (SCP) had been
greatly reduced. An establishment for a
committee to improve mental health treatment in
Australia was drafted SAGE Journals: Your
gateway to world-class journal research (s & s

5PRIVATE HEALTH INSURANCE 2017 REFORMS
2018).
March, 2018
Draft of exposure for the legislative tasks was
released for consultation with the public
Parliament used legislation in order to support:
- Benefits in travel as well as
accommodation for rural and regional
trips.
- Attractive prices for younger people.
- Changes in the provision of standard
information provision
Recovery of costs for tier two eligible users.
April, 2018
Waiting period for the mental health rules came
into effect.
End of May, 2018
Exposure for the rules was drafted and its release
awaited consultation.
June, 2018
The legislation was passed and rules were made
to:
- Define and implement the standard
clinical definitions of
Gold/Silver/Bronze/Basic categories and
implement newer information provisions
- Removal of benefits for natural

6PRIVATE HEALTH INSURANCE 2017 REFORMS
treatments and therapies.
July – August, 2018
Private reforms of Health Insurance were
integrated with the upcoming 2019 premium
round processes SAGE Journals: Your gateway
to world-class journal research. (The oral health
status, practices and knowledge of pregnant
women in south‐western Sydney, 2018).
October – December, 2018
Advisory committees advised the Australian
government on improving models of caring
(which included mental health-care as well as
care in rehabilitation centers). Cost models to
improve transparency in the out-of-the-pocket
costs will also be advised (Wu, Wang, Lam &
Hesketh, 2014).
January, 2019 Tier two arrangements will come into immediate
effect.
February, 2019
Superior clinical performance (SCP) premiums
will be removed form the Prostheses List.
April, 2019
Private Reforms in the Health Insurance sector
will come into immediate effect.

7PRIVATE HEALTH INSURANCE 2017 REFORMS
Factsheet for the reforms:
There are different aspects of the package that are provided by the Australian government
as a part of the package which are further described below in the following pointers:
- Gold/Silver/Bronze/Basic categories of products: These are products and categories of
hospitals that offer better experiences and medical services than the exiting old
infrastructures.
- Categories of clinics: There are different categories of hospitals/clinics that the patient
can be referred to by the insurance company based on the kind of medical insurance he
owns.
Benefit reductions from the prosthesis list: Many of the preexisting benefits for the users
of the health insurances have been reduced based on the prices of the insurances that is
spent by the users (The oral health status, practices and knowledge of pregnant women in
south‐western Sydney, 2018).
- An agreement between the Medical Technology Association of Australia and the
Australian government that asks the medical institutions to abide by the ethical rules and
regulations.
- Support for mental health: It has been decided that mental health treatment will also be
available under these reforms.
- Discounts available for people between 18 to 29 years of age: Special prices available for
people of this category.
- Natural therapies will be covered under reformed and improved health insurance plans
for the Australian citizens.
- Administrative reforms has been introduced for tier two health insurances.

8PRIVATE HEALTH INSURANCE 2017 REFORMS
- Out-of-pocket costs.
- Support has been extended for the private hospitals.
- Public hospitals will now entertain private patients (Wardle, 2016).
- Some of the earlier schemes as well as products has been terminated from use.
Prices of the health insurance has been revised to make them more affordable to the
Australian citizens.
Private health insurance reforms: Amendment Rules 2018:
The health ministry, which is under the division 333 in the Private Health Insurance Act
of 2007 made the rules for the subordinate legislation. These rules are stated below as:
- Year 2015 Health Insurance Rules in private sector (Complying Product).
- Year 2017 Health Insurance Rules in Private sector (Health Insurance Business) (Hort,
Djasri & Utarini, 2013).
- Year 2012 Health Insurance Rule number 2 in private sector (Incentive).
- Year 2017 Health Insurance Rules in Private sector (Lifetime Health Cover).
The rule amendments will contain certain measures, which are:
- Discounts to be provided to 18 - 29 aged customers
- More flexible statement for Private Health Information to be introduced instead of the
Standard Information Statement, which are to be provided to the customers.
- Insurance products requirements to be clearly set and stated which covers all the hospital
treatment
- Standardized categories of clinical operations as well as Gold/Silver/Bronze/Basic
categories of products will come into effect.
- Second-tier eligibility detailed framework to be introduced.

9PRIVATE HEALTH INSURANCE 2017 REFORMS
- Natural therapies coverage has to be removed.
- Clarify the protection schemes to be clarified to the customers (Hall, 2015).
Impact of removing the policy restrictions:
Around 25% of users who have insurance coverage for private hospitals insurance
purchase restricted coverage plans which are applied to other categories other than psychiatric
care in hospitals, rehabilitation as well as care in the palliative unit.Proposals were no longer
considered to allow the different insurers in private health sector to offer restricted coverage for
other categories of clinical benefits. Categories such as psychiatric care, palliative care as well as
rehabilitation were only allowed. Modelling in the Deloitte’s format shows that restrictions
removal would help in increasing the rate of draw for medium level products by around 10%,
which would in turn be converted to the premium channels (Willis, Reynolds & Keleher, 2016).
The Ombudsman of health insurance in the private sector has said that restrictions
removal can be harmful since, as it would be removing the access to choose doctors. The
prosthesis benefits of the present insurance holders would also be affected under this scheme.
Its importance lies in the fact that, people residing in the rural areas where it is difficult to access
the private hospitals will have the flexibility and provisions to now access them more easily and
the expenses will be covered under the policy. Retaining restrictions in rehabilitation as well as
palliative care in the Silver, Bronze as well as the Basic tiers, can protect the customers from a
rapid increase in the premium cases. This in turn will protect the policy holders will be protected
from the detrimental changes in the product lines (Osborn, Squires, Doty, Sarnak & Schneider,
2016).

10PRIVATE HEALTH INSURANCE 2017 REFORMS
Improved protection for consumers and terminating the policies:
Requirements will be introduced by the Australian government wherein the insurers have
to properly inform the adults and the insurance provider about their possible planes termination
of any particular product or transfer to a new product. Health insurers Australia already have
different kinds of products, which are not available for the new policyholders, and they should be
able to decide whether to make them available to the new policyholders to ensure a flexibility in
their working. The policyholders should also be able to decide if they want to close an old
existing product (Mossialos, Wenzl, Osborn & Sarnak, 2016).
If an insurer does not want to terminate a product, the following has to be provided
by them:
- New policy details
- Difference amount between the terminating and the new policy opted has to be paid.
- Relevant details about waiting periods relevant details that apply for the new product has
to be considered by the user.
It is important since a transparency will be maintained at the time of transfer of policy. The users
will be informed that not all aspects of the old policy will be covered under the new one.
Consumers will be immensely benefitted from this scheme since they will have a clear
understanding of the new policy and will have the provision to decide whether to transfer their
policies. This will also help the consumers to compare the different health insurance policies and
understand in details about the coverage they offer before choosing a particular product (Schoen,
Osborn, Squires, & Doty, 2013).

11PRIVATE HEALTH INSURANCE 2017 REFORMS
Legislative amendments:
On the 28th of March 2018, three bills were introduced in form of a package and was
presented to the parliament. It implemented certain reforms to make the health insurances
simpler as well as affordable for the customers:
- Amendment Bill of legislation in the Health Insurance of private sector in the year 2018.
- A Newer Taxation System, which was the amendment of the Medicare levy surcharge –
benefits and passing of the “private health insurance policies excess levels” bill in the
year 2018 (Mason, 2013).
- Medicare Levy Amendment for Medicare, which was the “private health insurance
policies excess levels”, Bill passed in the year 2018.
The Amendment Bill of Legislation in the Private sector of Health Insurance of 2018
contains some primary amendments. It is expected that the senate will support them in the
Parliamentary sitting of 2018 spring. Some of these amendments are:
- Strengthening of the powers held by the Ombudsman of the Health Insurance in the
Private sector.
- Better access to travel as well as accommodation benefits for the users.
- improving transparency in providing information to the consumers
- Offering discounts to users of age group of 18-29 (Li & Powdthavee, 2015).
Low priced health insurance products in the private segment:
Low priced products that are low priced play an important role in health insurance of
private segment which are rated by the community since it is beneficial for the users who have a
fixed income. It is also helpful for people wanting to have access to private medical institutions
from rural and interior areas. Users aged between 18-29 have the provision to purchase low

12PRIVATE HEALTH INSURANCE 2017 REFORMS
priced health insurance coverage plans for lifetime and they do not have to spend too much for
that. Younger people also have the option to upgrade their policy in the future as well. A Risk
Equalization Pool is used by most of the companies which analyses feedbacks form the
communities to improve their products and conduct risk assessment. The Advisory Committee of
private health minister had used the delloite model of low priced health insurance products role
of low priced products to come up with more strategies of premiums. Affordability by the
consumers is most important therefore the prices had been revised and the premiums have been
made more cost-effective. People value the coverage of less costly health insurance plans so they
should be available to the customers at affordable rates (Jakovljevic, Groot & Souliotis, 2016).
Conclusion:
Therefore, it can be concluded form the above study that health insurance reforms are
extremely needed in the society since it has a number of advantages in terms of medical and
hospital benefits. However, the policy terms and conditions are often too complex and they are
not transparent enough for the users to clearly understand what and all they cover. Therefore, it is
extremely important for the Australian government to come up with more flexible and low priced
health insurance for the users so that they can immensely benefit and make optimum use of the
policies that they purchase.
The health insurance sector in Australia can reach far-reaching heights if they consider
the needs of the users and successfully implement the reforms within their work organizations.

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References:
Flahiff, J. (2014). Affordable Care Act « Health and Medical News and Resources. Retrieved
from https://jflahiff.wordpress.com/tag/affordable-care-act/
SAGE Journals: Your gateway to world-class journal research. (2018). Retrieved from
http://journals.sagepub.com/doi/full/10.1177/0898264316686424
s, D., & s, W. (2018). The Australian health care system. Retrieved from
https://www.cabdirect.org/cabdirect/abstract/20173279780
The oral health status, practices and knowledge of pregnant women in south‐western Sydney.
(2018). Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1111/adj.12024
Hall, J. (2015). Australian health care—The challenge of reform in a fragmented system. New
England Journal of Medicine, 373(6), 493-497.
Hort, K., Djasri, H., & Utarini, A. (2013). Regulating the quality of health care: Lessons from
hospital accreditation in Australia and Indonesia. The Nossal Institute for Global Health,
Working Paper Series, 28.
Jakovljevic, M., Groot, W., & Souliotis, K. (2016). Health care financing and affordability in the
emerging global markets. Frontiers in public health, 4, 2.
Li, J., & Powdthavee, N. (2015). Does more education lead to better health habits? Evidence
from the school reforms in Australia. Social Science & Medicine, 127, 83-91.
Mason, J. (2013). Review of Australian government health workforce programs.
Mossialos, E., Wenzl, M., Osborn, R., & Sarnak, D. (2016). 2015 international profiles of health
care systems. Canadian Agency for Drugs and Technologies in Health.