Health Funds White Wash – What’s Best

Our recently distributed note “Health Funds White Wash” mistakenly made a reference to MIF which should have read HIF.

The recently announced changes to health insurance are cosmetic.  The major issue of extras cover by large funds shamelessly exploiting consumers was not even mentioned.

To avoid ambiguity we’ve linked two references to this document.

1. Article printed in Australasian Dental Practice magazine September/October 2016 – "Dental patients exploited by large health insurance funds",

2. Our Senate Inquiry submission

What the experts say
Private Health Insurance Administrative Council CEO Shaun Garth was quoted in The Advertiser of 30 March 2015 saying that extras cover was an irrational purchase and “probably doesn’t make sense”, however “funds spend a lot of money advertising it”.

Consumer Health Forum CEO Leanne Wells has called for ‘junk’ policies to be weeded out.  She pointed out that there are now 48,000 health policy options on the market (per The Australian 8 January 2016).  The best way to hide something is to bury it in a mass of data.  Health funds, which produce a myriad of policy options, are able to easily confuse consumers as to where true value lies or does not lie.

Former ACCC chairman Graeme Samuel, who had been an adviser on the government’s private health insurance review, was reported in the Australian Financial Review of 9th June 2016 as saying the complexity and capacity of health insurance makes it impossible for most consumers to make an informed choice.

Consumer group Choice spokesman Tom Godfrey has indicated that people would be better off keeping extras premiums in the bank and personally paying for dental treatment and spectacles.

The linked documents explain why extras cover for most is a rip-off.  It also explains that if patients wish to avoid being forced to go to a dentist other than their dentist of choice but still want to retain extras cover they are best to transfer to a small independent not-for-profit fund such as HIF or for that matter Teachers, Defence Health, Navy Health etc. if eligible.

Personally my wife and I have hospital cover with Defence Health which we have belonged to since my time as a regular army officer many years ago.

We do not have extras cover which for the vast majority of people is a waste of money.

The truth is that most of the population who have bought extras cover have been shamefully ripped off.  This is particularly so of the major funds who dial up a margin of 22% for themselves by rationing the benefits that they are prepared to pay.  The majority of us are better off dropping extras cover which is not required for tax purposes, keeping hospital cover only, and buying a policy with the maximum excess and minimum cost.  Attention is drawn to what impeccable sources have said – refer to the attached article and Senate submission.

If people really want extras cover and wish to have freedom of choice of their dentist and other allied health providers they are better off buying it from one of the minor providers such as HIF, Navy Health, Defence Health etc.  It’s easy to transfer to a new fund without loss of cover.

We note that 50% of what is supposedly covered under extras is dental treatment.

Regards to all,