The Australian Competition and Consumer Commission has noted some concerns, but also some progress, with the private health insurance sector in its Report to the Senate on anti-competitive and other practices by health funds and health service providers in relation to private health insurance*, tabled yesterday.
"The report outlines the ACCC's activities in relation to the private health sector during the last financial year, and also some concerns about some of the current practices in the sector", ACCC Chairman, Mr Graeme Samuel, said today. "The report also notes, however, that the major issues of concern are either being addressed or are best dealt with outside the ACCC's role of enforcing the Trade Practices Act".
Exclusions and restrictions
The Private Health Insurance Ombudsman raised concerns that some consumers may not receive adequate information about the restrictions and exclusions applicable to particular health insurance products.
"It is very important that health funds provide clear, straightforward information about their products, particularly in relation to those products that are subject to exclusions and restrictions", Mr Samuel said. "Providing this information helps to minimise problems for consumers who are unsure about the nature and extent of their coverage, and also reduces the likelihood of a dispute between members and health funds".
Portability
Portability of health fund membership - that is, the ability of members to transfer between funds without incurring penalty - was raised as an issue by a number of stakeholders this year.
"The ACCC supports the principle of portability and considers that it is an essential feature of the private health insurance system", Mr Samuel said. "However, some stakeholders have indicated that the practical operation of portability may be difficult at times".
For example, some stakeholders commented on an apparent problem with the operation of portability during contractual disputes between hospitals and health funds. Health funds noted that they could be penalised for inappropriately encouraging consumers to transfer funds, while no penalty applied to health service providers who did the same. Other stakeholders noted that the current portability provisions are ambiguous and may need some clarification.
Recent changes to the health insurance regime such as Informed Financial Consent and the new Quality of Advice Code may go some way to addressing these concerns.
Contracting between hospitals and health funds
Health insurance funds and health service providers both expressed concern at ongoing difficulties in the contracting environment, including delays in the commencement of negotiations, inappropriate negotiating tactics such as the use of publicity and 'take it or leave it' offers rather than genuine negotiation. Concerns were also raised about the efficacy of the voluntary code of practice that seeks to regulate contract negotiations between hospitals and health funds. The ACCC even received, during the year, allegations of anti-competitive conduct in the industry.
The ACCC has investigated these complaints and, except in one instance, has found that there was not likely to be a breach of the Act. Rather, the complaints appeared to stem from the use of hard bargaining by some parties and the adaptation of other parties to an increasingly open commercial environment. This is common in commercial dealings in all sectors and is not, in itself, unlawful.
Future reporting
The ACCC's experience over the course of producing the seven reports suggests that the major issues of concern identified above are either in the course of being addressed or are more properly the subject of external mechanisms outside the ACCC's role.
The ACCC will, of course, maintain its role in ensuring that compliance with the Act continues in the industry. However, it considers that this role no longer requires further monitoring of the industry in a formal manner. In the ACCC's view, the objectives of the report are now best met through the ACCC's existing mechanisms for dealing with, investigating, and if necessary, prosecuting complaints about alleged illegal behaviour.
The report will be available from the ACCC's website, or from the Publications Unit on (02) 6243 1143.
*By a Senate order issued on 25 March 1999 and amended on 18 September 2002, the ACCC is required to provide a report at the end of each financial year "containing an assessment of any anti-competitive or other practices by health funds or providers which reduce the extent of health cover for consumers and increase their risk of out-of-pocket and other medical expenses". This report is the seventh prepared by the ACCC in compliance with the Senate order. It covers the period from 1 July 2004 to 30 June 2005.
