Private health insurance reforms: Support for private hospitals

Improved arrangements to support private hospitals.

Page last updated: 11 October 2018

Private health insurance reforms: Support for private hospitals (PDF 213 KB)

  • Private hospitals and health insurers will benefit from a reduced administrative burden associated with second tier arrangements1. Private hospitals will also have confidence that hospitals are grouped consistently for the purpose of calculating and paying second tier benefits.
  • Consumers will benefit from the Private Health Insurance Ombudsman’s increased powers to investigate private health and private hospital contractual arrangements.
  • Private health insurers will be required to use standard clinical categories across all of their documentation and across all platforms. These clinical categories will be introduced from 1 April 2019 and insurers have until 1 April 2020 to adopt the clinical categories for all products. These clinical categories are consumer-friendly, easy to understand and designed to cover all services. Consumer testing has been done to ensure that the list of clinical definitions is appropriate for use by consumers.
  • The Government will continue working with the jurisdictions around the issue of private patients in public hospitals. Growth in the number of patients using their insurance in public hospitals over the last five years has contributed about 0.5% a year to premium increases.

Why is this important?

  • Private hospitals provide an important and valuable part of Australia’s overall health care system. The Government’s reforms will both support private hospitals and address private health insurance affordability and participation.

Who will benefit?

  • These reforms will benefit consumers, private hospitals and reduce health insurance costs.

What impact will this change have on private health insurance?

This package of reforms addresses private health insurance affordability and participation, and will provide stability to the private health system.

1 The second tier default benefit is the benefit paid by a health fund for hospital treatment provided by an eligible private hospital which does not have a negotiated agreement with the fund.