Australian households find private health insurance too complex

Private health insurance complex article

With over 40,000 plans on the market, private health insurance has become “a quagmire of cost and confusion” for Australian households, says Matt Levey, the Director of Campaigns and Communications at consumer group CHOICE. In a national survey commissioned by CHOICE, it was found that nearly half (44 percent) of Australian policyholders consider comparing health insurance too “difficult”, while the remainder was divided between “neutral” and “easy”.

Because of this perceived complexity, many people feel discouraged from looking for/ switching policies and taking the time to find a better deal compared to the insurance that they already have. Here, we look at the top reasons behind why so many Australians find private health insurance so complex, and provide some key tips on what you can do to educate yourself on the basics of insurance.

Why people find comparing private health insurance challenging

Respondents from the latest CHOICE survey revealed that many people find it hard to compare private health insurance. Here are the top reasons why:

  • 69% of respondents say they find it difficult to compare plans side-by-side
  • 54% find it difficult to compare out-of-pocket costs if they were to go to hospital
  • 53% say information from insurers is not set out consistently
  • 53% find it hard to compare extras* rebates
  • 45% believe not all policies are available for comparison
  • 43% of respondents find it hard to grasp insurance terminology
  • 39% say they are unable to compare cover for specific health problems that they’re worried about
  • 36% are unable to find independent information they can trust
  • 25% say they get too much information from insurers
  • 21% say they have experienced difficulties comparing what they would save on tax or get from a rebate

*Extras health insurance, also known as general or ancillary cover, provides coverage for non-hospital related medical services (e.g. dental, optical).

With so many people feeling overwhelmed by this complexity, Matt Levey from CHOICE believes that it could make a grudge purchase a bad one, leading to poor outcomes including securing an ill-fitting insurance plan. With this in mind, the survey results have illuminated the pressing need to improve health insurance literacy among the general public, so that people can make better, more informed choices.

How to educate yourself on health insurance

Private health insurance can be confusing at first, but the more you know about it, the better off you will be. This is especially true for those who are shopping for health plans for the first time, who may be understandably overwhelmed when faced with so many plans and insurance terms like “pre-existing conditions”, “coinsurance”, “deductibles”, etc. As such, having at least some basic knowledge of health insurance can go a long way in ensuring that, amid ever-rising premiums, you get the best value plan on the market.

So, how do you start your education? Looking for credible sources on the internet can be a great way to start, so that you can learn about the ins and outs of insurance at your own pace. In our goal to simplify health insurance, we’ve released a number of easy-to-read guides and reports that should be of use to anyone looking to learn more about insurance:

Our blog is also a great resource for various insurance-related topics; feel free to check it out here.

It’s also important to get impartial advice from an expert. We highly recommend that you talk to an established broker like Pacific Prime. With almost 20 years of experience in the field of private health insurance, we’re more than happy to answer any questions you may have regarding insurance terminology, finding the best plan that caters to your health and budget concerns, as well as give you a free quote and comparison of plans from the world’s leading insurers.

Do you have any more questions? Contact the helpful advisors at Pacific Prime today, or check out our free plan comparison tool here.

Source: CHOICE (2017). Making Private Health Insurance Simpler.

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