Australia's biggest private health insurer Medibank Private has joined many of its peers in offering free annual dental checkups for its 2.7 million "extras" policyholders.
Fresh from an executive shake-up, legal action from the consumer watchdog, and troubles sending out tax statements to members, Medibank on Sunday said its new policy would cost $40 million over three years and save a family of four up to $400 a year.
Dentists in demand: Medibank to provide free annual dental checkup to "extras" policyholders.Credit: Joe Armao
"Our customers tell us they want to get more value from their health insurance, and we're listening," said Medibank chief customer officer David Koczkar.
The announcement follows a poll showing that almost 70 per cent of Australians with private health insurance have considered ditching or downgrading their cover in the last year in the face of relentless price rises and diminishing value for money.
Medibank says its new policy would cost $40 million over three years and save a family of four up to $400 a year.Credit: Bloomberg
The percentage of people with private health insurance - hospital-only cover and hospital plus extras - both fell in the June quarter.
About 11.3 million people, or 47 per cent of the population, had hospital cover, down from 47.2 per cent in the March quarter. Meanwhile, 13.4 million people, or 55.7 per cent of the population, had extras cover. This was down 0.1 percentage points from the March quarter.
At the same time, the amount insurers paid out for extras payments fell in the three months to June 30, official figures show.
"During the June 2016 quarter, insurers paid $1.2 billion in general treatment (ancillary) benefits. This was a decrease of 2.7 per cent compared to the March 2016 quarter," the Private Health Insurance Quarterly Statistics for the June quarter state.
Insurers paid out $641 million for dental work in the June quarter, ahead of payments for optical, physiotherapy and chiropractic. "The largest component of ancillary benefits is dental, for which $203 was paid per insured," the report said.
Mark Fitzgibbon, CEO of listed insurer NIB, said most insurers offered a "no-gap" dental service and Medibank's announcement was not a sign insurers were worried about declining customer satisfaction.
"I think A, it's a good customer experience, and B, it's about providing an incentive for customers to do preventative things.
"The idea is, the more checkups people have, the less likely they've going to have problems down the track. It's an investment in prevention rather than a cure."
Mr Fitzgibbon said "logic would suggest" measures such as these makes policyholders less likely to switch.
Grahame Danaher, who heads the not-for-profit community fund Westfund, welcomed the policy. "One hundred per cent of dental illness and disease can be prevented, up to the age of 12, and that's remedied by two visits to the dentist a year," he said.
"Their [Medibank] issue will be, will they maintain it or will they dump it? It's not a good promotional thing for 12 months; it's something that needs to be maintained."
Mr Danaher said research showed that under 40s were reluctant about buying private health insurance, while over 40s were disgruntled about their coverage because they were not getting sufficient support for nutrition, exercise and chronic disease, such as high blood pressure, diabetes and pain.
Medibank is being pursued by the Australian Competition and Consumer Watchdog for alleged misleading and unconscionable conduct by failing to notify policyholders it had slashed coverage of common hospital tests such as X-rays, CT scans and blood tests.