Health Insurance Comparison Services - should you use them?

A plethora of health insurance comparison services have sprung up in recent times. Probably the best known is iSelect having been active for some years.

Now there are lots of comparison services available to Australians such as Comparethemarket, Choosi, HealthInsuranceComparison.com.au, HelpMeChoose.com.au, youcompare.com.au, compareinsurance, moneytime (part owned by HCF) and Canstar. You could be forgiven for wondering which one of these comparison services to use, let alone which health fund is best for you

For starters, let’s be clear – these operations are all developed to make money from health funds paying them to represent their products and services. Payments range from an upfront fee for the sale that could be between 25% and 40% of the premium you pay, to a smaller ongoing percentage of your premiums year after year.

So, what do they compare?

All the abovementioned services offer a limited range of health funds – with the most featuring 9 health funds (out of a total of 34 health funds in Australia). There is a striking similarity of the funds represented among these comparators – it’s basically the same funds on most or all of the comparators.

Many of them also provide similar comparison services across a range of industries – from insurance, financial services, internet service providers and even electricity.

The comparators generally market their services as designed to save you money. A word of warning here – they may be able to help you make premium savings, but you also need to be confident that the other financial implications won’t cost you more than you save in premium. For example, if you forego coverage of certain treatments in order to save on your premium, you can end up having to pay for them yourself at a cost of many thousands depending on the treatment.

They all provide a comparison in one form or another of policies offered by the funds they represent. This can be helpful within the limitations of the range of funds on their panels, but they are often not well placed to tell the whole story about which fund is best for you.

For example, if cover for dental is important to you, they can tell you what benefit entitlements are for the various policies they market, but what can they tell you about the out-of-pocket expenses a fund’s members experience at particular providers (especially so-called ‘preferred providers’)?

What can they tell you about the service quality of one fund compared to another? Or what their record is on retaining their customers – a sure sign of how well they look after them? What about their complaints record? How quickly do they pay claims? Is the fund’s attitude about looking for ways to pay a claim or ways to avoid them? How easy is it to contact them? What is the average time a caller has to wait before they get assistance? How quickly do they take to respond to email enquiries? What is the fund’s financial stability? And, can they explain how an individual fund’s profits are used to benefit their customers? Or are they distributed to shareholders?

These are merely some of the questions that get left unanswered when you rely solely on comparison services.

Some of this information is available publicly through reports of the Private Health Insurance Ombudsman but the onus is on the consumer to be aware of this ( www.phio.gov.au).

You might also be surprised to learn that comparative policy and premium information for every policy of every fund on the market is available through the Government website www.privatehealth.gov.au. Some of it is only available from the fund itself.

The conclusion to be drawn is that there are a lot of factors to consider when you are weighing up which fund or policy to join. The widest range of objective policy information is actually available through Government websites rather than commercial comparator services, however wherever you may obtain your policy and premium information, you shouldn’t avoid going the extra mile to be sure the service offering is as competitive as the policy itself.

Test the responsiveness and quality of the fund or funds on your short list by calling, emailing or lodging a website contact form. And if you do get to talk to someone, ask them about the things that are important to you.

You are probably paying thousands in premiums for your health insurance, so it pays to satisfy yourself that you are getting value on all fronts. Comparators can help, but be aware of their limitations and the alternative sources of information to assist you. Unlike many other goods and services, private health cover is personal, and affects two of the most important aspects of your life in your health and your wealth.

Don’t be tempted to cut corners in order to get the lowest cost – you will be paying a price at some level, but if it doesn’t deliver when you need it, it doesn’t matter how cheap it was.