Nearly half of Australians say comparing health insurance policies is "difficult". A quick look at policies by Fairfax Media via the websites of insurers, comparison services and a government agency showed even "easy to read" summaries were littered with jargon such as "sub limits", "gap bonuses" and "excess waivers". Choice is calling on the government, which has green-lighted a cumulative premium increase of 54.6 per cent since 2009, to make policies easier to digest. "When you're pushing people into it and they're faced with this overwhelming complexity, it could make a grudge purchase a bad one, leading to poor outcomes for everyone," said Mr Levey. The survey revealed the top reason for buying insurance was extras coverage, which he said was concerning as it might indicate consumer confusion and lack of understanding that it was "mainly a budgeting tool".

A Choice analysis of extras policies found the value of extras benefits had been declining. Choice's analysis of nearly 20,000 extras policies found that, while premiums continued to rise, the amount members could claim for individual items had failed to keep up. "We found set dollar benefits for extras cover have largely stayed the same between 2013 and 2016, with consumers who stay in the same policy being slugged a 'lazy tax' by paying more and getting the same benefit," said Mr Levey. "For example, in 2016 a typical benefit for an initial physio consult was $36, the same as it was in 2013. Meanwhile, average physio fees increased from $64 to $71." Rachel David, head of peak body Private Healthcare Australia, said health funds were paying more in claims for extras than ever before, from $2.7 billion in 2008 to $4.8 billion last year.

"Many health funds have gone down the path of contractual arrangements with dental and allied health providers to help address the issue of variable out-of-pocket costs for consumers," she said. "This enables them to provide consumers with access to things like no-gap preventive dental care, which is very important in terms of individual and public health." She conceded products had become increasingly complex and explained exclusions were introduced in response to consumer demand for affordable, "bespoke" products. She agreed with Choice the government-mandated "standard information sheet" (SIS) was "dense" and "hard to read" and needed to be improved.

"I also personally believe more needs to be done to improve health literacy in the community, as there is little point in any of this if consumers have incorrectly assessed their own health needs," she said. The government has been trying to reform the system for the past two years, but there have been few changes. A spokesman for federal Health Minister Greg Hunt said the government would consider changes to the SIS. He said the option of introducing a gold, silver and bronze model for categorising policies was part of "reforms being actively considered by the Private Health Ministerial Advisory Committee that will report to the Minister in the second half of the year". The Choice survey of more than 1000 policyholders also found 21 per cent planned to decrease or cancel their cover, and the biggest reason was cost.

This would be concerning news to insurers which have seen the proportion of Australians with hospital cover drop from 47.4 per cent in June 2015 to 46.6 per cent in December 2016. It also found that consumers relied heavily on profit-driven comparison services as a source of information. For example 25 per cent used iSelect. "[These] sites are not transparent or comprehensive [and] they commonly use their websites as funnels into call centres, where 'comparison' gives way to sales," it said. iSelect boss Scott Wilson said its service existed because health insurance was so complex. "We know from our own experience that customers don't just want comparison, they want the ability to ask questions, seek guidance and receive advice to help them make an informed choice," he said.

Christopher Zinn, chief executive of Private Health Insurance Intermediaries Association, of which iSelect is a member, said it was working towards being more transparent. Loading "New entrants and technologies coming into this area are to be welcomed alongside regulation to free up consumer's own data to make comparison easier and more accurate," he said. "Private health insurance information on policies certainly needs to be more openly available and the third parties (for example iSelect and Compare the Market) can create new approaches."