Variation of private health insurance cover

In its recently released report to the Senate on anti-competitive practices by health insurers in relation to private health insurance for 2013-2014 the ACCC concluded that “while health insurers may be strictly compliant with the requirements of the Private Health Insurance Act and the Code, the research has revealed examples where representations by insurers to consumers, including when entwined with policy variations, may be at risk of breaching the consumer laws.” It discussed different circumstances when private health insurance cover changes may be misleading.

The ACCC recommended a review of the triggers for requiring insurers to inform consumers about any changes that may affect their out-of-pocket expenses or choice of hospital or practitioner and how these changes are communicated.

Under the Private Health Insurance Act any proposed change to an insurer’s rules that is or might be detrimental to the interests of an insured consumer must be communicated in a reasonable time before the change takes effect. In addition, insurers have an obligation to provide their members with an updated Standard Information Statement (SIS) where policy changes are made as well as to provide a copy of the current SIS once every 12 months.

The Private Health Insurance Code stipulates that consumers should be provided with 30 or 60 days written notice depending on the nature of the change.

The ACCC said that it had identified that there is some obscurity about whether the obligation to notify of changes cover instances where an insurer changes its arrangement with service providers such as hospitals and specialists, but there is no consequential change in the terms and conditions of the policy.

It commented that “compliance with the Private Health Insurance Act and/or the Code does not, of itself, necessarily result in compliance with the Australian Consumer Law. In some circumstances, failing to inform consumers about policy changes can amount to false, misleading or deceptive conduct.”

The ACCC has identified competition and consumer issues in the health and medical sector as a priority area for 2015 in its Compliance and Enforcement Policy. It will consider conduct by health insurers that may contravene the Competition and Consumer Act in line with this policy.

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