Australians downgrading private health cover

Australians dumped or downgraded half-a-million ‘all-inclusive’ private health insurance policies last year as record numbers flocked to cheaper cover with exclusions and excesses.


The APRA figures show that the number of non-exclusionary – also known as ‘all inclusive’ – private health insurance policies with hospital cover fell by 500,471 to 3.5 million in 2014-15.


In contrast, there was a 558,619 increase in the number of health policies with hospital cover that exclude certain medical services and also require patients pay an excess and co-payment (gap).


This equates to a record 48.1 per cent increase in just 12 months – the largest-ever single increase of its kind.


The percentage of population with hospital cover also flat-lined in 2014-15 at 47 per cent, ruling out an increase in private health insurance take up as the reason the dramatic growth in exclusionary policies.


The findings coincide with the Federal Government today launching a national public consultation that will ask consumers their views on private health insurance and how they think it can deliver better value for money for patients.


The official 2014-15 results from the Australian Prudential Regulation Authority (APRA) follow Labor’s successive cuts to the value of the private health insurance rebate in their 2012-13 and 2013-14 Budgets – including means-testing and restricting indexation to CPI, not premium growth.


In response, hundreds of thousands of Australians prepaid their policies for up to three years in 2012 just before the first of the cuts came into effect in order to delay their impact.


Minister for Health Sussan Ley said, “A longer-term trend of premium increases above inflation across successive governments also suggests there is a something wrong with the regulatory foundations of our private health system.


“Either way, consumers are angry, confused and I’m concerned that simply shopping around is no longer enough to get the best value for money.


“Private health insurance is a fundamental part of our health system for Australians of all ages and income types, with half the population having some form of cover.


“We need to ensure this hard work isn’t undone by Labor’s cuts and the increasing flood of ‘junk’ policies that offer nothing more than a bed in a public hospital.


“It’s important we’re able to ask consumers what they expect from their private health insurance and there’s plenty of room to do that without moving towards US or UK models that exclude sick people and make it only available to the rich, which we don’t support.


“Consumers can have their say via our online survey: .”


Consultation will run for four weeks from Sunday 7 November until Friday 4 December 2015.


8 November 2015.