Private health insurance set for shake-up

Party with champagne and confetti

Modelling commissioned by the Private Health Insurance Ministerial Advisory Committee showed removing "basic" cover would increase premiums by between 15 and 21 per cent and result in more than 100,000 people dropping their cover.

Australians with private health insurance are being promised cheaper premiums and easier access to mental healthcare under a raft of new measures.

Once Australians turn 30, they are penalised and extra 2 per cent for every year after 30 that they don't have private hospital cover, meaning that it's a lot more expensive to take out later in life. Premiums have now jumped by an 5.6% annual average since 2010.

Mr Hunt believes the move will encourage young people to take up private health insurance while helping other policyholders.

That discounted rate would remain until they are 40, after which it would be phased out.

The Government will also take alternative therapies like homeopathy and reflexology, as well as yoga, off the list of items covered, while the waiting period for mental health services will be scrapped.

Health insurance products will be categorised into four levels of cover - Gold, Silver, Bronze and Basic - to help consumers understand what types of services their insurance buys.

But it's expected a cut to the price insurers must pay for some medical devices will drive the biggest reduction in premiums.

"The biggest problem in the affordability of private health insurance is the amount that's going into the pockets of the for-profit insurers", he told ABC radio. The Australian Medical Association has called for the "junk" policies to be banned.

"The mental health safety net is an important first step, but the work the minister has foreshadowed to reduce low-value day care admissions and other low value care is also critically important", he said.

It also plans on generating savings of at least $300 million per year by mandating price cuts for procedures including replacement hips and pacemakers.

"We are pleased that the minister for health has listened to the concerns of the private health insurance industry and acted to place the interests of consumers before the profits of large worldwide medical device manufacturers", he said.

"The goal must be to bring the price insurers are charged for prostheses down to parity with the public sector".

Those choosing to get health insurance between the ages of 19 and 29 will earn themselves a 2% discount on their premiums, up to a maximum of 10%.

"My hope is that we'll have the lowest premium changes in over a decade", he said.

The Australian Prudential Regulation Authority will be tasked with ensuring every dollar offsets premium rises in 2018.

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