Low cost, low cover private health policies rising

18 July 2017

An ACCC report into the private health insurance industry released today has found that affordability of private health insurance remains a significant concern for consumers.

The complexity of policy information provided by insurers is another key issue, reflected in increasing complaints about the industry. 

“Our report found that people are shifting towards lower-cost policies with lower benefits.” ACCC Deputy Chair Delia Rickard said.

“We are also concerned that consumers continue to have trouble understanding their policies, particularly when they are trying to make a claim.”

“It is in the interests of both insurers and their customers to be clear and transparent about policy offerings. This helps people to make informed decisions about the level of insurance cover they need and can afford,” Ms Rickard said.

Key industry developments and trends in 2015-16:

  • The affordability of insurance remains a significant concern for consumers, which is supported by research that shows household spending on private health insurance premiums has increased steadily over the past decade.
  • Consumers are shifting towards lower-cost policies with lower benefits. Between June 2014 and June 2016 there was a 400,000 reduction in hospital policies with no exclusions (which can be equated with ‘top cover’) while an additional 600,000 hospital policies with exclusions were taken out.
  • The amount of hospital benefits paid by health insurers per person increased by 4.2 per cent, along with a 2.9 per cent increase in general benefits per person.
  • Average out-of-pocket expenses incurred by consumers from hospital episodes increased by 6.9 per cent, compared to only 0.7 per cent for general treatments.
  • Overall consumer complaints to the Private Health Insurance Ombudsman (PHIO) rose for the third consecutive financial year, although the year-on-year increase of 3.5 per cent followed much larger increases of nearly 16 per cent in 2013-14 and 24.5 per cent in 2014-15.
  • The PHIO continued to receive the highest level of complaints regarding the benefits paid by insurers to consumers (over 30 per cent of total complaints in 2015-16). The main issue of consumer concern relating to benefits was hospital policies with unexpected exclusions and restrictions.
  • Consumers increasingly rely on information provided by commercial comparison websites when making decisions about their private health insurance. Around 40 per cent of consumers who made comparisons between insurers prior to selecting their current policy utilised a commercial comparison website, such as iSelect and Compare the Market, to assist their decision making.

Some insurers reported to the ACCC that they had made some improvements to their information provision practices, such as making website content more user-friendly and informative.

“The ACCC will continue to advocate for all private health insurers to clearly communicate important policy information to current and prospective members in a timely manner,” Ms Rickard said.

To compare private health insurance policies, consumers should visit the Australian Government’s independent website www.privatehealth.gov.au

The report is available at https://www.accc.gov.au/publications/private-health-insurance-reports/private-health-insurance-report-2015-16


Each year, the ACCC is required by the Senate to produce a report on key competition and consumer developments and trends impacting on people’s health cover. This report covers the 2015-16 period.

Many of the consumer issues identified by the ACCC in the report are under consideration by the Private Health Ministerial Advisory Committee, which is advising the Federal Government on potential reforms to the industry.

In addition, on 1 June 2017, a Senate Inquiry commenced into the value and affordability of private health insurance and out-of-pocket medical costs. The Committee is due to report in November 2017.    

The ACCC has recently taken action:

Release number: 
MR 113/17
ACCC Infocentre: 

Use this form to make a general enquiry.

Media enquiries: 
Media Team - 1300 138 917, media@accc.gov.au