For thousands of Australians, health insurance is causing anger, distress and frustration instead of providing the peace of mind the insurers have long promised, with complaints hitting a record high.
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The Private Health Insurance Ombudsman received 4416 complaints in 2015-16, nearly double the number a decade ago, according to the Commonwealth Ombudsman's latest annual report.
Despite having less than a third of the total market, the embattled Medibank accounted for 40.2 per cent of the complaints.
The insurer had an embarrassing year, including a legal battle with the Australian Competition and Consumer Commission over slashing coverage without notifying policyholders, an IT bungle that delayed its distribution of tax statements and a public beating by consumer group Choice, which described some policies as "junk".
"A high ratio of complaints or disputes compared to market share usually indicates either a less-than-adequate internal dispute-resolution process, especially for complex issues, or an underlying systemic or policy issue," the Ombudsman said.
Following Medibank was Bupa, with 26.8 per cent market share and 21.7 per cent of the complaints, HCF with 10.5 per cent market share and 10.6 per cent of the complaints, and NIB with 7.9 per cent market share and 7.8 per cent of the complaints.
The yearly number of complaints grew steadily by 31.2 per cent between 2006-07 to 2010-11. It then began accelerating, with the number jumping by 47.4 per cent between 2011-12 and 2015-16.
The Ombudsman said the biggest area of complaint was benefits, with the main issues being hospital exclusions and restrictions, general treatment (extras or ancillary benefits) and medical gaps.
It shared the story of one complainant, who required surgery to her hand. The insurer refused to cover the surgery because it deemed it "joint replacement", which was excluded from her cover, despite the fact it didn't involve replacing a bone.
The Ombudsman decided the insurer should only use a definition of the "joint replacement" term, as understood by most people. It concluded the surgery should be included in her policy.
"The health fund agreed that the surgery was not 'joint replacement' and paid an appropriate benefit," it said.
The second biggest area of complaint was membership, with key problems being policy/membership cancellation, clearance certificates and continuity of cover.
This was followed by misinformation, such as incorrect verbal advice and lack of notification.
Responding to the report, a Medibank spokesperson said the company recognised it had "experienced a higher rate than normal" of customer complaints.
"We know that the implementation of a new technology system has generated a number of issues for our customers. This has meant that they have not experienced the service that they expect from us, and we apologise for this," the spokesperson said.
"Medibank is working hard to improve the experience for our customers and provide them greater value."
In August, while announcing a 46 per cent surge in full-year profit off the back of hiked premiums and reduced payouts, Medibank's new chief executive, Craig Drummond, said they needed to "understand and feel our customers' pain".
Members quit the insurer at a higher than industry rate last year amid the scandals and embarrassments, sending numbers backwards by 100,000 to 3.8 million. Mr Drummond said they expect to lose even more market share this year.
"Frustration with our company goes up and that's just not acceptable," he said.
"What we need to do as a business is re-orientate to our customers. If we have happy customers we will have happy shareholders."
Mr Drummond has overhauled senior management with a series of changes which include replacing its chief financial officer.
