However, that premium-to-benefits discrepancy is narrowing, thanks to new standards implemented in 2019, with price increases slowing over the past five years.

In 2018-19, Australian private health insurance policy holders saw an increase in their policy cost by 2.8% - hospital benefits' payout saw a 2.8% increase, and extras' payout was 3.1% on the year.

The 2.8% increase in payments is outpacing the consumer price index (inflation), and wages, which fell in real terms in the fourth quarter of 2019.

Federal Health Minister Greg Hunt in December announced a 2.92% increase in premiums from 1 April 2020.

The new standards implemented from 1 April 2019 include categorising products into Gold, Silver, Bronze and Basic tiers, as well as youth discount incentives and lowering premium prices in exchange for higher excesses.

The Government also launched a website on 30 December 2019 that lists typical out-of-pocket fees for common treatments and procedures in the private system.

Despite these measures, the standards introduced haven't necessarily coincided with positive changes across the board.

The ACCC's report outlined more than 57% of policies now contain exclusions, up from 44% in the previous year.

Deputy chair Delia Rickard said the practice of insurers not outlining exclusions is potentially misleading.

“Many people may not be aware their policies may have exclusions and don’t realise they would not be covered at all for treatment as a private patient for those conditions,” Ms Rickard said.

“We’ve been working with private health insurers about how they can better communicate such detrimental policy changes to consumers.

“Insurers need to make sure these changes are communicated clearly, prominently and in a timely manner, to avoid misleading consumers."

Who benefits most from private health insurance?

In 2018-19, the number of people covered by private health insurance declined in most age groups up to age 60, however the number of those insured aged over 60 is increasing.

Just 44.2% of the Australian population held hospital only or combined health insurance cover in June 2019 - down 0.9% on June 2018.

This represents a 12 year low, and Private Healthcare Australia chief Rachel David said rising premium costs were fuelled by an "ageing population, increased use of health services, and the rising cost of medical technology".

Recent research revealed 2.23 million Australians dumped their policies in the past five years, and 64% in a survey cited cost of premiums as reason for leaving, with half also citing 'lack of value for money'.

One fifth (21%) also said they prefer the public system.

Grattan Institute in December found benefits paid to young people was half that of all fund members annually, and called for a winding down of the Medicare levy surcharge and premium loading for people aged 31-40.  

Under current legislation, private health insurers are required to charge all members - regardless of age - the same premiums in a system known as 'community rating'.

This differs from other forms of insurance, such as car and life insurance, which are risk-based, and influenced by factors such as driving record, age and more. 

Consumer health data also under the microscope

The ACCC today also flagged health insurers' use of consumer data as cause for concern.

This includes seemingly benign health and fitness apps, according to ACCC deputy chair Delia Rickard.

“Several health insurers offer rewards schemes for their members, some of which include the use of tracking apps to record physical activity," Ms Rickard said.

"Such information may in some cases be combined with other external data sources to profile consumers for targeted marketing.

“While Australian consumers can benefit from these programs, we are concerned that few consumers may be fully informed or fully understand the scope of data collected when they sign up for, or use, such services.”

Such apps include Qantas' health insurance - issued by NIB - featuring frequent flyer point bonuses for members who use its 'Wellbeing' app and undertake certain activities. 

Other health insurers have apps that measure sleep, steps and other fitness indicators.

The consumer commission is currently undertaking enforcement action relating to 'misleading and deceptive' conduct regarding consumer data in the health sector.

Industry-wide, the largest health insurer is BUPA, with a 26.4% market share, followed by Medibank at 26.0%.

Others in the top five included: HCF at 11.7%; NIB at 8.1%; and HBF at 7.2%.

Other insurers made up the remaining 20.6% of the market.

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