Two of the biggest health insurers, Southern Cross and Aetna Health, have agreed to reimburse a number of policyholders more than $100,000 because their policies didn't provide the cover they claimed.
"The companies claimed that these policies would pay 100 percent or 80 percent of patients’ reasonable medical costs, but some people got less than 20 percent," Commerce Commission John Belgrave says.
"All the people who did not get what they were promised will be reimbursed and the policies will be changed so that no more people are disadvantaged.
Southern Cross has acknowledged that people who joined the "KiwiCare", "RegularCare" and "RegularCare Plus" polices between July 1, 1996 and August 20 this year were likely to have been misled about the level of reimbursement for the costs of angioplasty and cardiac surgery.
Under the Deed, Southern Cross will reimburse the people who bought those policies in the three years and who claimed for cardiac surgery or angioplasty. The people involved will receive a total of $145,223.20 in reimbursements.
Aetna has acknowledged that statements made in its "Essential" and "Essential 100" policies may have conveyed a misleading impression about the level of reimbursements for angioplasty, cardiac surgery, lithotripsy and hospital accommodation.
Belgrave says that the Fair Trading Act, which the commission alleges Southern Cross breached, has a three-year statutory limit. It cannot take action against behaviour that occurred more than three years ago.
Aetna will reimburse people who bought these policies in the five years from September 1994 and who did not receive reasonable reimbursement for angioplasty, cardiac surgery, lithotripsy or hospital accommodation.
Belgrave said that Southern Cross and Aetna are writing to all people who bought these policies and claimed for these treatments, and will explain how they will pay the reimbursements.
Alliance health spokesperson Phillida Bunkle, who took the case to the commission last year, says, "the public were being ripped off and the insurance companies have been caught red-handed."
She says the refund maximums were not based on 'reasonable charges', rather they were set well below the typical cost for most operations.
In one case that formed part of Bunkle's complaint, Aetna client Derek Hunter needed an angioplasty. The 'refund maximum' for his operation was $2,100 per procedure, plus the cost of a night in hospital and other expenses. The full cost of the operation was $20,347, while Aetna contributed only $4,248, or 20 per cent of the policyholder's total costs.
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