Young Australians are increasingly taking out private health insurance despite cost of living pressures

Despite rising cost-of-living pressures, younger, healthier people are increasingly purchasing private health insurance, according to a report released Tuesday, in a trend one health policy expert called ” not rational”.

The report also found a variation of up to $700 in rebates paid to patients from different funds undergoing the same procedure performed by the same doctor at the same hospital.

Before the pandemic, the proportion of people with insurance for hospital care plummeted thanks to confusing policies that offered poor value for money. Young people, in particular, were giving up private coverage.

But the Australian Medical Association’s (AMA) private health insurance report card for 2022 showed a continued upward trend in membership over two years, with the proportion of people with hospital insurance rising from 43, 6% in June 2020 to 45.2% in June 2022.

The report also revealed that profits for private health insurers have never been higher despite reduced demand for hospital care due to the cancellation of many elective surgeries during the pandemic.

The findings prompted the president of the Australian Medical Association, Professor Steve Robson, to call on insurers to offer members better value for money.

“The fact that there are big differences in amounts paid for the same doctor performing the same procedure is frustrating for consumers,” Robson said.

“This variation in out-of-pocket spending is one of the reasons the AMA asked an independent regulator – an authority of the private healthcare system – to oversee private health insurance to ensure that policyholders get a fair amount of value. – awards through a mandatory minimum amount which each insurer is required to take over patient care.

Ian McAuley, a researcher at the Center for Policy Development who has undertaken extensive research on the private health insurance industry, said the report reflected the latest quarterly private health insurance statistics from the Australian Prudential Regulation Authority.

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“The data shows that older people have always had private health insurance, but in the 35 to 54 age group there has been a big increase in membership,” McAuley said.

“Younger, healthier people joined disproportionately, a break from previous trends, and that surprises me. Because if you’re young and healthy, you’re subsidizing anyone over 55, who is the age at which you become a net beneficiary”.

McAuley said multiple reports have found that despite industry reforms aimed at simplifying private health insurance policies, consumers are still confused about their insurance coverage and are paying more than ever for less coverage.

“I don’t think it’s at all rational to get private health insurance in the younger age brackets,” he said.

“While it is unclear why young people are joining again, speculatively there has been a heightened awareness of vulnerability during the pandemic. When people look at the healthcare system and read about all the strains placed on it during the pandemic, they think “I’m going to get private health insurance to get ahead of the queue.” But they do it without really considering where the queue is and if the system really works. It is certainly not rational.

McAuley said governments should stop supporting the private health sector and should better fund the public health care system, including massive investments in chronic disease. He said private health insurers should eventually be phased out altogether.

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“Governments need to nurture trust in the public system and they can do this by investing in primary health care and the national disability insurance scheme to reduce the demand on hospitals,” he said. “We need major system-wide health financing reform, especially to support people with chronic conditions, an area that private health insurers don’t really want to know about.”

The AMA, however, said the private system, which covers 40% of hospitalizations in Australia and performs two out of three elective surgeries, is crucial in keeping pressure on public hospitals. But said there should be a mandatory minimum amount of profit that each insurer is required to return to patient care, Robson said.

“Insurers’ profitability has increased in recent years not only due to growth in new members, but also elective surgery reductions during the pandemic,” Robson said.

“With insurers’ spending on service fees and their profit margins remaining generously high, we want the money patients pay in premiums to fund their healthcare, not an increase in insurers’ profits. Value for money is more critical than ever as consumers are impacted by the rising cost of living. »

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