In this article, iSelect breaks down some of the key insights from APRA’s June quarter health insurance statistics, and what implications they could have for members.
Participation in private health insurance continues to decline, plummeting to its lowest membership base since 2007 according to the latest quarterly snapshot by the Australian Prudential Regulation Authority (APRA).
The report shows that the proportion of the population with hospital cover dropped to 43.6 per cent in the last quarter, when 28,567 people dumped their hospital cover in the three months to June 2020.
Here are some of the highlights form the report:
With many Aussies under increased financial pressure due to reduced income or loss of employment, it’s understandable that many policy holders are questioning the value of private cover, particularly in light of recent COVID-19 restrictions on elective surgeries and extras services.
Even before COVID-19, many Aussies were struggling to justify the cost of private cover with premiums having risen by more than 50% over the past ten years.
Health insurance funds need to increase their private health insurance premiums to keep up with rising costs due to our aging population and expensive improvements in medical technology. However some members can find it frustrating when they feel that the amount funds are paying out to members is decreasing, at the same time premiums are increasing.
Many health funds are planning to increase their premiums on 1st October 2020, after having initially postponed the scheduled 1st April 2020 rate rise for six months to help financial pressure experienced by many policy holders due to COVID-19. It is expected that premiums will also increase again as normal on 1st April 2021, meaning many policy holders may experience two increases over six months.
As a result, it would not be surprising over the next year if we continue to see an increase in the number of Australians dropping out of private cover altogether, along with fewer Australians taking out health insurance for the first time.
In these uncertain times, the peace of mind and greater choice that private cover can provide may be more valuable than ever. If you are struggling with the cost of your health insurance, look to switch and save, rather than simply ditch. Switching can be well worth it, with 67% of recent iSelect switchers surveyed paying less for their health insurance. Of those, 78% told us they saved more than $100 a year, including 43% saving over $300 a year.
Take the time to explore whether there may be a more affordable option available through either switching to a different fund or making changes to your policy. For example, you could decide to increase your excess, drop your extras or even temporarily downgrade your level of hospital cover to keep costs down. Just make sure you are fully aware of what you are no longer covered for so you aren’t caught out should you need to make a claim.
A key risk of cancelling your private cover is increased waiting times for elective surgery through the public system, especially given elective surgery waiting lists in public hospitals likely to blow out due to the coronavirus backlog.
You also need to be aware that if do cancel your cover entirely, if you decide to re-join down the track then you will have to re-serve waiting periods and may be stung with higher premiums as a result of Lifetime Health Cover (LHC) loading depending on your age. And if you are a higher income earner (earning over $90,000 as a single) then you may have to pay more tax via the Medicare Levy Surcharge (MLS) if you don’t have private hospital cover.
1. APRA Quarterly Statistics: https://www.apra.gov.au/sites/default/files/2020-08/Quarterly%20Private%20health%20insurance%20statistics%20June%202020.pdf
2. Department of Health 2020 Premium Price Change: https://www1.health.gov.au/internet/main/publishing.nsf/Content/privatehealth-average-premium-round
3.February 2020 survey of just over a 1000 (1103) customers who recently switched private health insurance policies and/or providers through iSelect.