“The Big Switch” is a promotion – being driven primarily via one media outlet – that encourages consumers of health insurance to sign up to the prospect of a better deal via the bargaining strength of “people power”.
It has literally been making headlines for the past month, the latest of which was splashed across the front page of newspapers around Australia on Sunday the 7th of April with the promise of a “$695 HEALTH BONUS”.
So the Big Switch claims – in response to a consumer stampede – to have negotiated a 10% discount that will save private health insurance consumers big money via one particular health fund (ahm which is a brand of Medibank).
Despite all the hype, the reality is much different.
In effect, all the discount does in many cases is bring the premium rates down to the level of many of their competitors, particularly the not-for-profit health funds like Westfund. While the discount deal makes some ahm policies more competitive, Westfund already offers family Top Hospital Cover at rates that are more than 3% ($140 a year) lower than the ahm discount rate. Another level of policy – Top Hospital with Family Extras – costs 9% or $268 a year more than the equivalent Westfund cover.
The devil is in the detail.
Consumers need to look for the policy that is right for them, then compare the actual rates and cover to be sure that a discount actually gets them a better deal than is on offer via other ‘standard’ rates.
It’s like a big campaign that claims to have negotiated a discount on, say, a credit card from a bank that already has one of the highest interest rates. You might get excited at first – until you learn the discount STILL doesn’t bring the rate down to the best deal you can find elsewhere for yourself.
In short, a keen shopper doing their own online searching would find there are a number of health insurance policies in the same price and benefit range as the one on offer via the so-called Big Switch. It is clear that consumers should compare the amount of the premium against what they are being offered rather than assuming a 10% discount will automatically give them a better deal.
It makes sense to check the benefits and scope of the coverage as well. And as ever, the risks are often in the fine print where cancellation fees and refund of discounts can apply if consumers cancel out of the Big Switch offer.
In any case, it seems odd that a government-owned health fund can go “cap in hand” to the Federal Government and be awarded a 6.2% premium increase (effective from the 1st April) and then immediately promote a 10% discount less than one week later.
Perhaps they didn’t really need the increase? Maybe they were just keen to make more profit for their owner (the Federal Government)?
Competition is healthy and informed consumers create a healthy market place. Let’s hope consumers of health insurance go one step beyond the hype and find a better deal that works for them.
Phillip Berner, Chief Operating Officer, Westfund