Health Fund: is a loyalty scheme age discriminatory?

HBF Health Fund Inc has lost an application to the Administrative Appeals Tribunal to review a decision by the
Minister for Health and Ageing directing HBF to modify its rules by adding a rule that HBF "will not further
publicise and not further implement" a loyalty bonus scheme proposed by HBF as it was discriminatory (as defined in the National Health Act).

HBF is a Western Australian based fund. It is a mutual "not for profit" membership organisation with approximately
950,000 members.

In summary, the scheme proposed that:
• To quality for a loyalty benefit members must have either hospital or
ancillary cover and have at 3 years continuous membership.
• Loyalty benefits increase as the length of membership increases.
• The HBF loyalty benefit includes an ancillary component rewarding members for either reducing or deferring claims for services viewed as discretionary.  This is to reward the member’s loyalty to the membership as a whole.
• For members with the same ancillary claims to contribution ratio, benefits under the initiative will be higher the longer the membership.
• Benefits accrue until the member reaches the age of 65, at which time they are available to be used, unless there are unforseen circumstances.

The Minister argued it was discriminatory on the grounds of age as well as claims history. The Tribunal agreed having regard to the special provisions of the National Health Act:

25. In the sense of the ordinary meaning of "discrimination"  the proposed scheme, if implemented, would discriminate in favour of contributors who are over the age
of 65 years. One only receives the financial benefits of the scheme when one reaches that age. A single person, for example, could be a contributor with HBF for forty years, dies before reach 65 and never receive a bonus under the scheme. But the question is whether it is "improper discrimination" within the meaning of s66(1)(ba).

26. It can be argued, and indeed it was on behalf of the applicant, that the scheme only discriminates in a positive way to assist those who have attained the age of 65 years. This
may be said to be a proper objective as people over 65 generally tend to have lower incomes, but increased needs.

27. Looking beyond health insurance it is fair to say that there exists in Australia many different schemes which provides benefits to people of a certain age. In a number of the states, if not all,
senior cards provide a range of benefits and discounts only for those over 60 years of age. It is interesting to note that in s33 of the
Discrimination Act 2004 (C’th) an exemption is provided if "…
(a) the act provides a bona fide benefit to persons of a particular age."

28. It was put on behalf of the respondent that the general provisions of anti-discrimination legislation such as the Commonwealth Act referred to above render positive age discrimination
unlawful and that is why it is necessary to expressly provide specific exemptions, such as  exists in s33.   It is further pointed out that the
National Health Act has no such exemptions except the limited exemptions referred to in s66(1)(ba).  Such exemptions could have been easily included by the legislature had that really been its

29. The definition of improper discrimination in s66(1) of the Act and the nature of many of the grounds specified in (a) to (e) of that subsection make it clear that the grounds were
specifically chosen in order to protect the integrity of the health insurance system. Some of the grounds are very different from those one would expect to find in broad based anti-discrimination. In other words "discrimination" here has a particular relevance and application to health insurance.   The desire to protect, for example, those who need frequent medical services and the full
range of age groups is self evident in the Act…

31. It is not so much the provision of benefits to people over the age of 65 which is the concern, but rather the fact that contributors of any other age, whether it be at age 20, 30,
40 or whatever age, have no right, at that age, to receive any financial benefit under the scheme. This is despite the fact that their contributions may indirectly assist to finance the benefits which flow only to that limited age group.

The Fund is reportedly (AFR) intending to appeal.

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