The health insurance market is dominated by the big two funds, Bupa and Medibank, who each make up about a quarter of the market . Most people have heard of these, and maybe also a couple of other medium-sized funds like HBF, HCF and NIB. Over eighty percent of people with health insurance are with one of these "big five" funds.
Did you know there are over 40 health insurers to choose from? Have you heard of Frank by GMHBA, Australian Unity, or HCI? Some of these small funds are for-profit, like AIA, and some are not-for-profit like HIF. Restricted membership funds like Doctors' Health and Teachers' Health, are small funds too and even those are worth a closer look – they aren't as restricted as you might think.
There are also funds that seem small, but are actually owned by big funds, creating the illusion of even further choice . Below we go through the pros and cons and explain three things you need to know about big funds vs small funds.
Which are the small funds?
- AIA
- Astute Simplicity
- Australian Unity
- CBHS Corporate
- CBHS Health
- Defence Health
- Doctors' Health
- Emergency Services
- Frank
- GMHBA
- HCI
- HIF
- Health Partners
- Hunter Health
- Latrobe
- Mildura
- Onemedifund
- Navy Health
- Nurses and Midwives
- Peoplecare
- Phoenix
- Police Health
- Reserve Bank Health
- St Lukes
- Teachers Health
- TUH
- UniHealth
- Union
- Westfund
1. Small funds must meet same standards as large funds
All health funds, big and small, have to adhere to a set of rules that ensure they can continue operating. These rules are set down in legislation, and regulated by the Australian Prudential Regulation Authority (APRA).
Insurers must:
- keep the money for running their health insurance business in a separate fund to any other assets
- keep enough cash on hand to pay any claims for the next month
- have enough assets to be able to pay out any liabilities for the next year.
All health funds are also answerable to the Commonwealth Ombudsman, the independent government body that adjudicates complaints from customers about private health insurance. The Ombudsman regularly publishes complaints figures for each fund and compares them against the insurer's market share.
If a health fund has a higher share of complaints than it does customers, that's an indication its customer service processes might not be the best. You can click through to individual fund pages on the list above to see the latest complaints rating we give each fund based on the number of complaints the Ombudsman receives about them
2. It's cheaper to go with a small fund
Small funds are usually the cheaper option for Gold hospital policies (the highest level of hospital cover you can get).
In fact, the five largest funds all have Silver Plus hospital policies that cover less but are more expensive than Gold policies sold by smaller funds.
Of course, you need to consider potential out-of-pocket expenses too. Insurers make agreements with hospitals and doctors about how much you'll have to pay for treatment and accommodation. The more agreements a fund has, the better chance your insurer will pick up more of the bill.
Many small- and medium-sized health funds are part of a group called the Australian Health Service Alliance (AHSA). Insurers pool their resources into the AHSA, which negotiates agreements with hospitals and doctors that cover customers of all funds. Called Access Gap Cover, this scheme provides as good (in some cases better) protection against out-of-pocket costs as the large funds. Astute Simplicity, Hunter Health, Mildura and St Lukes are the only small funds listed above that are not members of this Alliance.
3. Small funds give you just as much choice in who treats you
Large funds like to spruik the extra benefits their customers get by going to practitioners in their agreement networks – higher rebates on glasses, no gap dental care, and so on. Some funds even operate their own dental and optometry clinics, although professional bodies like the Australian Dental Association have pretty strong views against the merits of "preferred provider" schemes.
Professional bodies like the Australian Dental Association have pretty strong views against the merits of 'preferred provider' schemes
But it's worth noting that these networks aren't restricted to the big funds: many smaller funds also have deals with individual dentists, physiotherapists and optometry chains. And even if they don't, every fund will still pay normal benefits for services provided by qualified professionals – you can go to your preferred provider and be sure your extras health insurance will give you cover.
Funds that seem small but aren't
When is a small fund not small? When it's owned by one of the big five health insurers.
Who owns whom is something to be aware of when comparing policies. For example, if you compare an NIB policy with an AAMI and an ING policy, you might find they all look the same. That's because they're often just re-branded versions of the NIB policy.
| Parent Company | Brands |
| HBF |
|
| HCF |
|
| NIB |
|
| Medibank |
|
You can still get great value policies from the big funds and their sub-brands, but you should consider all the options on offer. The range of policies out there is bigger than most people realise, and it definitely pays to shop around.
We're on your side
For more than 60 years, we've been making a difference for Australian consumers. In that time, we've never taken ads or sponsorship.
Instead we're funded by members who value expert reviews and independent product testing.
With no self-interest behind our advice, you don't just buy smarter, you get the answers that you need.
You know without hesitation what's safe for you and your family.
And you'll never be alone when something goes wrong or a business treats you unfairly.
Learn more about CHOICE membership today
Stock images: Getty, unless otherwise stated.
