Health insurance companies are using sneaky and undisclosed methods to increase their prices.

The private health insurance industry has been given a stern warning that they will be publicly exposed if they continue to use deceitful tactics to drive up premium prices. The Commonwealth ombudsman discovered that many insurers have been taking advantage of a loophole known as "phoenixing," where they end a product and replace it with a nearly identical one at a much higher cost. This practice has resulted in a 21% increase in premiums for some customers in just one year, which Health Minister Mark Butler deemed as price gouging.

Butler expressed his concern about this issue, stating that if two members of the same fund are paying drastically different prices for essentially the same service, it can only be described as price gouging. The ombudsman's investigation was prompted by a report from consumer group Choice, which revealed that some insurers had increased their prices by a whopping 47% over three years. While phoenixing itself is not illegal, Butler emphasized that it goes against the spirit of the law and is a sneaky way for insurers to raise prices without proper approval.

The practice of phoenixing is not limited to a few bad actors, but rather, it is widespread throughout the entire industry. It is especially prevalent in "gold" products, which are the only option for Australians to access services like maternity and major surgery cover. Butler stated that the government will take action to make phoenixing illegal and will publicly name and shame any insurers who continue to engage in this practice. He also mentioned that all options are on the table, including legislative changes, to prevent this from happening in the future.

This warning comes after Australia's 29 private health insurers submitted their proposals for price increases for the upcoming year in November. However, Butler rejected these proposals after receiving advice from regulators and the health department, urging insurers to reconsider and come back with lower price hike proposals. He emphasized the need for insurers to "sharpen their pencils" and find ways to keep prices affordable for their customers.

In conclusion, the government is taking a firm stance against the unethical practice of phoenixing and is determined to hold insurers accountable for their actions. The hope is that this warning will encourage insurers to act in the best interest of their customers and find alternative solutions to increasing prices. The ultimate goal is to ensure that private health insurance remains accessible and affordable for all Australians.

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