Insurance companies caught red-handed
Phillida Bunkle MP Tue Sep 14 1999
A complaint to the Commerce Commission by Alliance health spokesperson Phillida Bunkle has helped patients get reimbursements totalling $145,223 from medical insurance companies.
The insurance companies were telling patients that their policies would cover 80% of the real cost of an operation when in fact they would cover only 20%.
In December last year Phillida Bunkle wrote to the Commerce Commission about Aetna Insurance's 'Essential cover' policy which stated it would provide '80% reimbursement of expenses for medically necessary procedures based on reasonable charges, up to the refund maximums stated below.'
The refund maximums themselves, however, were not based on 'reasonable charges'. In fact they were set well below the typical cost for most operations.
In one case that formed part of Phillida Bunkle's complaint, Aetna client Derek Hunter needed an angioplasty. The 'refund maximum' for his operation was $2,100 per procedure, plus the cost of a night in hospital and other expenses. The full cost of the operation was $20,347, while Aetna contributed only $4,248, or 20% of Derek's total costs.
The Commerce Commission broadened its investigation to other Aetna policies and to similar misleading deals promoted by Southern Cross.
'The public were being ripped off and the insurance companies have been caught red-handed,' Phillida Bunkle said.
She's surprised that there hasn't been a criminal prosecution as a result of the finding.
'The insurance companies have agreed that they were involved in misleading conduct which breached the Fair Trading Act. They are lucky that they have got away with only having to reimburse patients, pay costs to the Commission and change their policies.
'There will be no compensation for patients who couldn't afford to have their operation when they realised that the insurance companies were not going to pay out on their promises. If anyone has died because of the insurance companies' behaviour, the companies will not be punished for it.
'The episode highlights the dangers of the Government's determination to privatise the health system. Insurance companies do not offer the care that the public system does and the public needs better protection than the insurance companies will provide,' Phillida Bunkle said.