Customers forced out of private health due to high costs

Australians are ditching their private hospital cover or simply choosing not to purchase it in the first place, with private hospital coverage dropping to its lowest level since 2009, new data shows.

Data from the Australian Prudential Regulation Authority (APRA) reveals 44.9 per cent of the population, or 11,254,008 people, were covered by hospital treatment cover in September. This fell by 0.2 percentage points when compared to June, with a decrease in coverage of 5,256 insured people in the September 2018 quarter.

According to figures, single policies decreased by 2,013, while family policies fell by 1,692. Western Australia and the ACT are the only two states or territories with a majority of insured people, sitting at 54.6 per cent and 54.4 per cent respectively. 

Those in the Northern Territory were the most likely not to be insured at 60.3 per cent, followed by Victoria at 58.6 per cent, Queensland at 58.1 per cent and Tasmania at 56.9 per cent.

Despite private hospital cover decreasing, the APRA data shows Australians using their private health insurance continues to increase and has done since the mid-2000s.

Figures show that the people who do have insurance are using it more. Australian Private Hospitals Association CEO Michael Roff said episodes of care have increased because Australians value private hospitals, but conceded it was concerning there was a big jump in cheap, low-value policies that exclude certain services.

“Australians are being encouraged to take out low-value, high exclusion products to keep their premiums low, but they may not be aware this also reduces their access to care when they need it,” Roff said in a statement. “The problem is we just don’t know which services are being excluded.”

Still, benefits paid by health funds on behalf of members increased by 3.62 per cent over the same period to a record $20.4 billion, while premium revenue increased by 3.31 per cent.

Private Healthcare Australia Chief Executive Dr Rachel David said more than 21,000 Australians took out private health insurance (PHI) during the September 2018 quarter, increasing PHI participation from 13.547 million to 13.568 million Australians.

“The proportion of the population with PHI cover was down slightly (-0.12 per cent) to 54.1 per cent,” she said. “However, with more than half of the Australian population committed to holding on to their health cover, the PHI industry, Government and healthcare stakeholders must continue to work together to address cost pressures.”

The latest information comes as the Federal Government announced reforms to private health insurance, with all private health insurance products to be moved to Gold, Silver, Bronze and Basic product categories by 2020, with the transition period to be implemented from April, 2019.

Read more: Private health shakeup: Government details rules for new ‘tiered’ health cover

The new tiered health insurance system is set to separate 70,000 private health policies to make it easier for Australians to understand what they’re getting from their health cover.

Under the new regulations, private health insurers will be forced to provide customers with clear information that allows them to compare different insurance policies using a standardised system.

The Basic and Bronze covers are the more affordable options and will allow consumers to access key health services, while Silver and Gold policies provide more comprehensive cover. Insurers can also offer additional cover to minimum requirements. In these cases, cover would be named Basic Plus, Bronze Plus or Gold Plus.

“But until the reforms are implemented, people need to be very careful about which services are excluded, and they should review their policy to ensure they are covered for services they might need in a private hospital, and not just take what their health fund or a website tells them is a cheaper policy,” Roff added.

What are your thoughts? Do you believe private health is now too expensive?