More Aussies ditching private health as basic hospital cover falls to 12-year low

A new report from the Australian Prudential Regulation Authority has revealed almost 30,000 said goodbye to their hospital cover in the last three months. Source: Getty

The number of Aussies forking out the big bucks for hospital cover has dropped to its lowest level in over a decade, as new figures reveal that close to 30,000 people have chosen to bid farewell to their private health coverage over the past three months.

Data from the Australian Prudential Regulation Authority (APRA) has revealed the significant decrease in those opting to pay out for hospital treatment cover, with just 44.2 per cent of Aussies opting for coverage in the last quarter – a drop of 0.3 per cent or 28,539 insured people throughout the country from March this year. Breaking down the numbers, it was the younger generations who opted to forego the option on the largest scale with a whopping 7,804 people aged between 20 and 24 ditching hospital cover.

They were followed closely behind by families with 6,338 policies dropped and 2,445 less single policies in the past three months. Meanwhile, as hospital cover decreases the out-of-pocket expenses for Aussies every time they go to hospital have increased with the average amount paid by Australians sitting around $315, up around 2 per cent in 12 months. As for specialist appointments the gap was an average of $151, however, this amount changed between states and territories.

Canberrans paid the most in the past three months with an average gap fee of $271.40, while those in New South Wales were slapped with a charge of around $209.40 and South Aussies got away with the least expensive trip to the specialist with a gap of less than $70. The new data comes just weeks after it was revealed older Aussies are the main demographic still shelling out for private health insurance while the younger population continues to cease their coverage.

The stats, released by APRA last month, showed older Australians were the only age group to increase their participation. Older members of the community are more likely to have more complex and expensive health needs and rely more on private health to cover costs than younger generations, but there are fears the large number of younger people dropping out could cost seniors more in the long run.

A total of 65,000 fewer people had health insurance in December 2018 compared to the previous year – marking the biggest 12-month fall in private hospital coverage in 15 years – but statistics showed over-65s are continuing to opt for private health coverage in droves. Average premiums have increased by 26 per cent in the past five years and in most cases, incomes have not increased to match this. In fact, private health insurance premiums rose by an average of 3.25 per cent around the country on April 1. Most people on a singles policy now pay an additional $62 a year under the changes, while couples policies increased by an average of $151 annually.

Compared to under-65s – where there were 125,000 fewer people with hospital cover – there were 63,000 more over-65s with cover. Those aged between 20 and 29 saw the largest per cent decline (down to 6.9 per cent), while the highest per cent increase was observed in the 90 to 94 age group (up 8.8 per cent).

Meanwhile, the 70 to 74 age group saw the largest increase in total insured people, up 24,380 to 573,462 from 549,082 the previous year. It was a similar trend for other older age groups, with the 65 to 69 group increasing by 796, the 75 to 79s jumping by 188,801, the 80 to 84s increasing by 10,966 and the 85 to 89 group rising by 2,328.

The statistics followed a report released earlier in July by think tank the Grattan Institute which said people were increasingly dissatisfied with private health insurance. It warned that an increasing number of younger Aussies are opting to cancel – or foregoing altogether – private cover, which could lead to further issues.

Experts warned that the sector faces a “death spiral” if young and healthy people continue to ditch their cover, leaving only older Australians accessing health insurance. This would in turn drive up the cost of premiums due to increased pressure on the system.

“It’s inevitable that government will have to make tough decisions about whether more subsidies are the answer to the impending crisis,” lead author and Grattan Institute Health Program Director Stephen Duckett said at the time. “Governments have failed to clearly define the role of private health insurance since Medicare was introduced in the 1980s. The upshot is we have a muddled health care system that is riddled with inconsistencies and perverse incentives.”

The report also called on the government to rethink the taxpayer-funded subsidies available to the industry. At the time, $6 billion of taxpayer money was going towards the private health insurance rebate, while $3 billion was being spent on private medical services for patients.

Important information: The information provided on this website is of a general nature and information purposes only. It does not take into account your personal health requirements or existing medical conditions. It is not personalised health advice and must not be relied upon as such. Before making any decisions about your health or changes to medication, diet and exercise routines you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from a medical professional.

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