Insurance rip-off risks consumers’ health

[box border=”full”]CHOICE says Australians are risking their health as insurance prices spiral[/box]

A CHOICE investigation into the Australian health insurance industry looking at more than 25,000 health insurance [1] policies has found that 19% of health expenditure comes directly from the pockets of Australian consumers and isn’t rebated by Medicare, which is the highest contribution of all English-speaking countries.

The news comes following a hike in health insurance premiums last month of 5.6% on average, taking Australians contributions to twice that in the United Kingdom. It also follows the change on 1 July last year that saw Australians who earn more than $84,000 (single) or $168,000 (couple/family) ineligible for the full 30% Private Health Insurance Rebate.

“Worryingly, since means testing was introduced for the private health insurance rebate the CHOICE investigation uncovered a trend [2] in consumers downgrading their level of cover to accommodate increased costs,” says CHOICE spokesperson Tom Godfrey.

“The news gets worse for consumers who prepaid before 30 June last year as they will for the first time experience the full bill shock as we head into premium renewal season. Also, from 1 July they’ll no longer receive the private health insurance rebate on the lifetime health cover (LHC) component of their premium.”

“The investigation found that 14,000 people have applied to access their superannuation savings to pay for health costs, a move that should concern health and welfare agencies and is a potential indicator of those with chronic illnesses struggling with to stay afloat.”

The CHOICE investigation highlights a concerning trend in Australian healthcare where the most vulnerable consumers are facing dramatic health insurance premium price rises for policies that compromise their health and financial security.”

To read more on CHOICE tests, reviews and campaigns, go to

The good news is there are some simple things consumers can do to offset the impact of the prices rises and the policy changes:


  • Review your extras cover
  • Take a look at your Hospital Cover and ask yourself why you have it. Is it for tax or health?
  • Check for a discount for paying annually or direct debit
  • Visit and

Compare Policies

  • Check whether you qualify to join a restricted membership fund
  • Beware of lifetime limits (some funds have them for orthodontics) and combined annual limits
  • Our analysis of health insurance finds that top-cover policies with an excess or co-payment provide better value than medium-cover policies

How to switch funds

  1. Get a detailed quote
  2.  Ask for the cover to start only when the old cover is cancelled
  3. Clearance certificate
  4. Itemised claims statement (make a copy and send to new fund)
  5. Cancel direct debit with fund and your bank

Health funds reviewed

  • AHM
  • Australian Unity
  • BUPA
  • Central West
  • CUA
  • GMF
  • HBF
  • HCF
  • HIF
  • Health Partners
  • Latrobe
  • Medibank Private
  • NIB
  • Peoplecare
  • Queensland Country Health Fund
  • St Lukes
  • Westfund

[1] The 25,000 health insurance policies reviewed include hospitals and extras.

[2] Since means testing was introduced for private health insurance rebate on 11 July 2012, Insurers have told CHOICE they’re seeing a trend in customers downgrading their level of cover to accommodate increased costs.