The private health fund Bupa has told a third of its Australian members they are no longer covered for hip and knee replacements, pregnancy and other major procedures.

The change, effective from July, comes as doctors’ groups, politicians and a Senate inquiry criticised Australian health insurers for being overpriced and “useless”.

Bupa, a UK-based company, made 49% of its worldwide profits from Australia and New Zealand alone in 2016. It is Australia’s biggest private health insurance provider.

Jennifer Doggett, a fellow for the Centre for Policy Development, said the move was focused on creating cheap, basic, low-cover packages that were attractive to younger customers.

She said this trend towards less effective cover spoke to an underlying failure within the private health model. It means that private health insurance does not ease pressure on the public system.

The Bupa changes cancel cover for cataract procedures, hip and knee replacements, pregnancy and IVF, and kidney dialysis for those on “minimum benefits” policies. A Bupa spokesman told the Australian it would cut costs and lead to lower premiums, but would not reveal how much would be saved.

In October, the government announced a plan to discount private health premiums for those under 30, while existing policy also imposes a penalty for those over 30 without insurance.

“With the current government’s carrot and stick approach, there is a certain percentage of the population who will take out insurance even if it offers no benefit at all,” said Doggett.

Many low-risk customers choose to buy cheap, “junk” insurance because it is cheaper than paying the Medicare levy, she said.

“What’s in the product is irrelevant to them. That shows how ridiculous the situation is. The government is subsidising a product that people are buying to avoid tax. It’s obviously an incredibly inefficient way to fund healthcare.”

On Tuesday, a survey conducted by Essential found a large number of Australians wanted the government to stop subsidising private health, and use the money to make dental care free on Medicare.

In the survey 48% supported the move and 32% opposed it.

In October, the head of the Australian Medical Association said too many health policies were “useless”, and a Senate committee in December found the number of low-cover polices had “increased dramatically”.

For the newly-amended Bupa policies, the affected procedures had previously been listed as “restricted cover”. This meant customers would likely still have paid large out-of-pocket fees to access them.



Doggett said this meant most private policies did not take any pressure off the public system.

“If they go private they could be out of pocket by several thousand dollars, even with a decent policy. So a lot of people would say well I’ll just go to the public hospital.

“The public hospitals say they have to deal with the fallout from these junk policies because they’re not taking any pressure off them.”

She added there was a risk that younger or low-risk customers would be caught out by their low-cover plans.

“It is a bit of a dangerous game ... the more you [remove cover], the less it is a genuine insurance product.

“Hip and knee replacements are one of the main benefits for people in private health insurance. For elective surgery they can jump the queue and get it done earlier. Removing joint replacements really downgrades the worth of the policy.”