Legal Insights

Communicating detrimental changes to private health insurance products – Part 3

By Elizabeth Blanch

• 04 November 2016 • 3 min read

The Australian Competition and Consumer Commission (ACCC) has this week published its 17th annual report to the Australian Senate on competition and consumer issues in the private health insurance industry.

As expected, the report substantially focusses on what the ACCC calls 'poor industry practices' adopted by some insurers regarding the manner in which they notify their members of changes to their private health insurance benefits. This is, of course, the issue that has been front-and-centre in the industry this year following the ACCC’s commencement of proceedings against Medibank.

The ACCC’s report specifically calls out member communications that:

  • are co-mingled with marketing information or general product booklets/pamphlets
  • use ambiguous language, jargon or ill-defined terms
  • provide the information under low-prominence headings
  • are contained in one-off emails to unconfirmed addresses or
  • rely on passive communication techniques (such as website updates).

The ACCC cites bill shock, inadequate insurance coverage, lost switching opportunities and limited access to healthcare as some of the effects of these notification practices.

Whether private health insurers are adequately communicating detrimental changes to their health insurance products is something on which we have been focussing in this blog. We initially raised the question of whether particular clauses in health insurance policies could constitute unfair contract terms given that these policies often give the insurer the right to make unilateral variations to the policy terms. Our subsequent piece following the commencement of proceedings against Medibank noted that compliance with the requirements of the Private Health Insurance Act 2007 (Cth) and the Private Health Insurance Code of Conduct is not necessarily sufficient to comply with the Australian Consumer Law.

In particular, what is clear from the Medibank proceedings is that the ACCC considers that drawing a distinction between a change in benefits because of a rule change and a change in benefits because of a change in underlying contracting arrangements is artificial when the outcome for the insured person is the essentially same. The ACCC make this point absolutely explicit in the report:

“This industry practice [of not notifying consumers of changes to their benefits] appears to be driven, in part by a narrow view of compliance with notification requirements under the Private Health Insurance Act 2007, and an overly restrictive view of compliance with the Private Health Insurance Code of Conduct, without due consideration to general obligations arising under the Competition and Consumer Act 2010 and Australian Consumer Law.”

Of broader interest to the healthcare sector is that healthcare continues to be a priority area under the ACCC’s 2016 Compliance and Enforcement Policy. The ACCC has listed a number of other key areas of investigation including:

  • medical practitioners being subject to restrictions or excluded from practising in a particular facility or geographic location
  • accreditation decisions in relation to medical practitioners being made by their competitors, or potential competitors
  • exclusive or conditional arrangements for the supply of medical or health-related goods or services
  • potential cartel behaviour in the medical and health industry.

These are key risk areas in a variety of commercial arrangements throughout the sector.

The full report can be found here.

By Elizabeth Blanch

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