Younger gens ditch ‘pricey’ private health, but older Aussies still forking out

Older Australians are continuing to fork out for private health, while younger generations are ditching cover in droves. Source: Getty

While the total number of Australians ditching private health cover has risen dramatically in recent times, new figures have now revealed older Aussies are the main demographic still shelling out for it – and they could be the ones who will eventually lose out long-term.

The stats, released by the Australian Prudential Regulation Authority on Thursday, show that older Australians are 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 show 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.

Read more: Scrap Medicare and make private health insurance compulsory, NIB boss says

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’s 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 latest statistics follow 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.

Read more: Older Aussies facing health insurance hike as the young ditch private cover

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.

“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 present, $6 billion of taxpayer money goes towards the private health insurance rebate, while $3 billion is spent on private medical services for patients.

Health minister Greg Hunt launched a fresh review of private health insurance to reduce premiums and reverse declining membership earlier this week. Speaking to reporters, he said he’d met with private hospitals, private health insurers and other medical leaders on the next stage of private health insurance reforms to reduce pressure on costs.

Read more: Dozens of natural therapies no longer available under new private health rules

Do you have private health insurance? Do you think it’s worth it?

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your personal health requirements or existing medical conditions. That means it’s not personalised health advice and shouldn’t be relied upon as if it is. Before making a health-related decision, you should work out if the info is appropriate for your situation and get professional medical advice.

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