Jenée Tibshraeny weighs up whether nib's new health insurance products are using gimmicks to sugar-coat, or substance to justify, price increases

By Jenée Tibshraeny

The country’s second largest health insurer is hiking the cost and improving the quality of some of its basic products, as it pitches to migrants, millennials and young families.

nib has deepened and broadened the cover of the products it sells direct to better cater to “an increasingly diverse population”.

Yet you’ll pay up to 69% more in premiums for nib’s new suite of products, which supposedly include benefits attractive to less-insured demographics of society.

The question is: is the insurer using gimmicky offerings to sugar-coat premium increases, or will the improved cover be worth the price hikes?

Let’s take a look.

Everyday cover

nib has included a raft of new and improved benefits to its Everyday products. These provide cover for day-to-day health costs like dentist, GP, physio and optometrist appointments, rather than hospital visits.

While nib has added titbits of cover, collectively worth a couple thousand dollars, it has removed a $5000 benefit for specialist consultations and diagnostics, as well as a $300 benefit for GP minor surgery.

The question is whether cover for the likes of acupuncture, traditional Chinese medicine, vaccinations, speech therapy and osteo appointments is more valuable than specialist appointments and minor GP surgery that may be linked to more costly and serious health problems.  

nib CEO Rob Hennin says this sort of cover is relevant to what people are demanding.

Asked about the removal of specialist consultations and diagnostics, Hennin says: “We weren’t seeing a huge use of that benefit in the Everyday products.”

Changes to nib's Everyday annual cover
  Standard Everyday Premium Everyday
New benefits What's included    
Mental health Psychology/psychiatry consultations $350  $500
Speech therapy Speech therapy $200 $400
Therapeutic care and vaccinations Acupuncture
Chinese medicine
Remedial massage
Vaccinations
$150 $300
Improved benefits  What's included    
General treatment Physio
Chiro (new)
Osteo (new)
$350 (was $100) $500 (was $250)
Optical Optical appliances
Optical consultations (new)
$350 (was $250) $500 (was $350)
Dental  Preventative dental 
General dental 
Major dental 
Orthodontics
$750 (was up to $500) $1000 (was $750)
GP and pharmaceutical  GP consultations
Pharmacy prescriptions
GP minor surgery (removed)
$350 (was up to $100) $500 (was $300)
Removed benefits  What's included     
Specialist and diagnostics  Specialist consultations
Diagnostics
None None (was up to $5000)

Turning to price, the insurer has attempted to keep things simple by charging all Everyday policyholders the same premium, regardless of their age or state of health.

This has seen the cost of nib’s standard product increase by a whopping 69%, and its premium product by 40%.

  Previous annual premiums New annual premiums Percentage change
Standard Everyday  $257 Adults: $436
Children: $202
69%
Premium Everyday Starting from $497
(varies by age)
Adults: $696
Children: $332
40%

In theory, having a flat rate means healthy policyholders are effectively subsidising the premiums of less healthy and thus more risky policyholders.

Hennin doesn’t accept this, saying nib underwrites its products on their own merits.

The interesting thing is, the demographics nib is targeting its Everyday products to - migrants, millennials and young families - are most likely fairly healthy.

Southern Cross Health Society comparison

Weighed up against a similar basic day-to-day health costs product offered by Southern Cross Health Society, nib’s offerings are both more comprehensive and more expensive.

The backbone of Southern Cross’s HealthEssentials product is similar to nib’s, providing cover for GP, dentist, optical and therapeutic care costs.

However, Southern Cross doesn’t provide cover for what you could describe (perhaps minus the mental health cover) as the bells and whistles that nib does.

nib and Southern Cross Health Society cover comparison
Benefit Annual benefit limit
  nib Standard Everyday nib Premium Everyday Southern Cross HealthEssentials
Dental $750 $1000 $500
GP  $350 (includes pharmacy prescription cover) $500 (includes pharmacy prescription cover) $150
Physio, chiro, osteo $350 $500 $250 (includes dietician cover)
Therapeutic care (ie acupuncture) $150 (includes vaccinations) $300 (includes vaccinations)
Mental health $350 $500 None 
Optical $350 $500 $350
Speech therapy $200 $400 None 
TOTAL BENEFITS $2500 $3700 $1250

As for price, Southern Cross’s HealthEssentials is generally cheaper than nib’s Everyday products.

nib and Southern Cross Health Society premium comparison
Annual premium for male  nib Standard Everyday nib Premium Everyday Southern Cross HealthEssentials
Age 25
Smoker/non-smoker
$436 $696 $364
Age 50
Smoker/non-smoker
$436 $696 $548

The price differences are most apparent with younger policyholders, due to Southern Cross having a regular tiered pricing structure that sees less risky policyholders pay less for cover.

The only instance in which nib would be cheaper, is if an older person (age 50) wanted its Standard product; a scenario which is highly unlikely as the product isn’t targeted towards this sort of person.

A 50-year-old is likely to either have no health insurance, or opt for more robust cover that would cover them if they got cancer or needed a hip replacement for example.

Hospital cover

The idea behind nib’s Everyday products is that they can be bought in conjunction with its Hospital products, which provide cover for the big things like cancer treatment, surgical procedures and diagnostic investigations.

As a part of its new direct-to-customer product launch, nib has increased the cost and cover of its Hospital products.

It’s difficult to make exact comparisons with its old offerings, as it has consolidated three products in to two.

The greatest improvements in cover are between the former lowest level product and the new standard product.

The $150-$300 over two years gym or sports membership benefit, aimed at young people, is most certainly a gimmick.

However pushing nib’s marketing pitch aside, the increase in cancer-related benefits are substantial.

Changes to nib's Hospital annual cover
New benefit: 
Gym membership & sports bonus
Improved benefits:
Hospital medical 
Cancer treatment
Non-PHARMAC cancer treatment 
Follow-up investigations for cancer
Travel and accommodation for cancer treatment
Parent accommodation
Podiatric surgery
Pre-existing cover for newborns
Varicose veins

The cost of nib’s premiums for Hospital cover has also increased by 19%.

  Previous annual premiums New annual premiums Percentage change 
  For 25-year-old male, non-smoker
Standard Hospital N/A Starting from $436 (varies by age) N/A 
Premium Hospital Starting from $451 (varies by age and circumstances) Starting from $538 (varies by age and circumstances) 19%

Interestingly, the cost of the nib's Hospital cover isn't a whole lot more than its Everyday cover, even though the benefits of Hospital cover have a much higher monetary value and provide cover for more serious health problems and thus more costly treatments.

nib also has a range of more robust products, which you can buy through an adviser or receive through your employer.

Here are documents from nib outlining the above changes to its Everyday and Hospital policies. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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4 Comments

All that and no vote Jenee - a packaging exercise or a solid material gain?

I will leave you to make up your own mind Ralph :)

You are the very model of decorum.

IMHO these every day policies are like insuring the tyres on your car instead of the car itself, get proper medical insurance covering the major risks - forget the rest?