As many as one in four users of private health insurance have had a claim refused, a shocking new survey finds.
Conducted by the Consumers Health Forum, it finds that only half of all private health insurance customers know with confidence what their policies cover. Only one in four finds it easy to compare policies.
The average premium is $1935 for singles, $3955 for couples and $4337 for families. Additional out-of-pocket expenses average $2035, meaning that four out of 10 privately insured Australians face expenses of at least 6 per cent of household income.
One in five face expenses of at least 10 per cent.
"It's a poor result for health insurance which exists on the back of huge government financial and regulatory support," said the forum's chief executive, Leanne Wells.
Just over half the Australian population has some form of private health insurance. The Private Health Insurance Rebate costs $6.3 billion a year.
On Friday the forum will present the government with a proposed reform called myCover, which would require funds to offer simple, standardised policies that consumers could easily compare.
Only policies that met the myCover standards would qualify for the Private Health Insurance Rebate.
The policies would provide hospital cover and extras cover only where the procedure was supported by evidence.
Savings would be ploughed back into the health system.
A spokesman for Health Minister Sussan Ley said the government's own survey found consumers were concerned about affordability and transparency. It was reassuring that the forum was finding the same thing.
"The Minister maintains her concern about the growing number of junk policies and hidden catches," the spokesman said.
The Minister maintains her concern about the growing number of junk policies and hidden catchesSpokesman for Sussan Ley
"The government is focused on getting the balance right between ensuring strong competition and high-quality, straight-talking health cover."
In an address to the National Press Club in October, the Minister explored the idea of limiting the rebate to hospital cover and supporting other expenses by government-assisted health savings accounts.
The myCover plan proposed by the forum would set up a web-based one-stop shop where consumers could compare and choose between complying policies and get information about actual fees charged by doctors and hospitals.
The internet survey of around 500 privately insured Australians found half took it out in order to avoid being charged more as they aged, and one-third took it out in order to avoid the Medicare surcharge.
Fewer than one in three of those surveyed were satisfied with their fund's ability to keep costs under control.
Two-thirds believed their policies provided them with better access to hospitals for elective procedures but only half thought the policies adequately covered their health needs.
"We want consumers to be confident the policies they purchase will provide them with real value," Ms Wells said. "The confidence should be driven by transparency of information and clear measures of performance. A system that delivers any less is not worth sustaining."
The Minister will release the results of her review of the private health insurance system in the first half of the year.