Private health insurers pledge to pass on savings

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The government announced today that they will be implementing discounted health insurance premiums for those aged between 19 and 29, along with a raft of other changes, the ABC were told in an exclusive.

As foreshadowed by The Australian Financial Review, Health Minister Greg Hunt will on Friday announce changes he said will make insurance simpler and more affordable.

At a press conference in Melbourne, Hunt explained that for each year below 30 a person took out private healthcare they would get a 2% discount, up to a total of 10%, which would remain until they were 40.

Attracting more young people into private health insurance is critical to keeping the sector sustainable in an ageing population.

"Given the cost burdens and modest wages many young people have, it would seem likely that this measure is only likely to be taken up by a minority of young adults who have the means, with the result that the two-tiered health system emerging in Australia is entrenched at an even earlier time of life".

News Corp also said the Government will also try to end the confusion surrounding the choice of the best health fund policy by revamping its private health insurance ombudsman website and giving the ombudsman more staff.

On Friday, Nib CEO Mark Fitzgibbon said the government's moves was "the most effective action for lowering pressure on premium increases for everyone".

People will get the option to increase their excess - $750 for singles and $1500 for families - in exchange for lower premiums.

That will save them about $1 billion over the next four years and is expected to be the biggest driver of lower premium rises, starting from April 2018.

Premiums have increased an average of 5.6 per cent a year since 2010, but Hunt wouldn't put a figure on how much that will fall. "We will pass on in full the savings from lower prostheses prices to our customers, which will help to keep downward pressure on premiums", said Medibank Private chief executive Craig Drummond.

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"Any measure that encourages young people to join is therefore very important", Mr Crombie said.

The AMA has also criticised the government's failure to abolish "junk" private health policies, such as those which only give cover in public hospitals.

Benefits will not be available for a range of natural therapies, including aromatherapy, herbalism, homoeopathy, kinesiology, naturopathy, pilates, reflexology, shiatsu, tai chi, and yoga.

They will now be categorised into four levels of cover, Gold, Silver, Bronze and Basic, which is created to make it easier to work out which product is right for you.

These are low-priced policies that do not cover many treatment for many illnesses.

Labor's health spokeswoman Catherine King says young people will only save about 70 cents a week, while older Australians won't receive any returns to their back pocket.

Australian Medical Association president Michael Gannon says the move won't solve the issue of affordability, but it is a step in the right direction.

"Consumers in private hospitals have been paying wildly inflated prices for medical devices sometimes as much as five times what it costs in the public system for exactly the same device", he said.

"The biggest problem in the affordability of private health insurance is the amount that's going into the pockets of the for-profit insurers", he told ABC radio.

"The people who pay the most for private health, and use the most private health, will continue to see their premiums increase next year", she said.

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