Like many young Australians, 26-year-old Niccola Oka does not have private health insurance.
It’s a trend that could topple the industry, a new report from The Grattan Institute warns.
Private health insurance premiums have risen out of step with wage growth and inflation, with young and healthy Australians now increasingly turning their backs on the product.
In fact, in 2017-18, Australians paid around $23.9 billion in premiums - an increase of $834 million on the previous year, ACCC figures reveal.
This could have disastrous consequences for the sector if the government doesn’t institute urgent reforms, Grattan Institute Health Program Director Stephen Duckett said.
“It’s inevitable that government will have to make tough decisions about whether more subsidies are the answer to the impending crisis,” he 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.”
He said those remaining private health insurance members are now older and are more likely to have to go to hospital, driving premiums higher again.
And, he added, Australians are already subsidising the industry by around $9 billion every year.
“The question then becomes whether government should support private health care directly, or via public health insurance – or not at all.”
He said younger people will continue to cancel coverage if change doesn’t occur, triggering a “death spiral”.
However, in order to respond to the sector’s challenges, the government needs to decide what private health insurance is; a means of accessing a wider range of treatments, or a substitute for public hospital care.
“Australia’s health care system needs reform,” Duckett said.
“The current system is an unhappy mix, in which private care complements the public system by offering additional services and dimensions otherwise not publicly available, but also to some extent competes with the public system by offering substitute services.”
The Grattan Institute said it will attempt to answer the questions around what the purpose of private health insurance is in the coming months.
Aussies hit back on Twitter
But Australians are already sharing their opinions on private health cover on Twitter.
“Here's a private health insurance story: I've been on the public hospital waiting list for 18 month for surgery on my sinuses because the same surgery would cost me >$10k out of pocket with my private health insurance. I've had coverage for nearly a decade,” ABC journalist Shalailah Medhora said.
Here's a private health insurance story: I've been on the public hospital waiting list for 18 month for surgery on my sinuses because the same surgery would cost me >$10k out of pocket with my private health insurance. I've had coverage for nearly a decade.— Shalailah Medhora (@shalailah) July 15, 2019
Others described private health insurance as a scam.
“Private health insurance is a massive scam. There’s no product available in any age bracket with full coverage. It’s far too expensive with enormous excesses.”
Private Health insurance is a massive scam. There’s no product available in any age bracket with full coverage. It’s far too expensive with enormous excesses.— 💧🌊💦 🌱Rural Oz Matters 💧🌊💦 (@UndaSthnXiStand) July 16, 2019
private health insurance is a SCAM 🗣🗣— Michelle Rennex (@michellerennex) July 16, 2019
And others added that it’s 10-times harder to claim from the National Disability Insurance Scheme (NDIS).
“Private health in Australia doesn’t cover cost of essential services. That said, I’m listening to discussion with great interest: private health *did* cover my kid’s Cochlear Implant processor,” Swinburne senior lecturer in media, Belinda Barnet said.
“NDIS did not. Private health cover approx 30 per cent of all her costs -NDIS resounding 0 per cent.”
So to all the Australians discussing private health insurance: the National Disability Insurance Scheme is ten times harder to claim (we’ve never been successful).— Belinda Barnet (@manjusrii) July 16, 2019
What happens to the patients relying on #NDIS who don’t even have the (imperfect) backup of private health?
However, others said bankruptcy horror stories saw them purchase cover.
“I had private health insurance for 2 weeks when I found a lump on my breast and had to go for scans. They might have rejected a claim but the horror stories of the numbers of Australians that go bankrupt when undergoing treatment drove me to purchase cover,” Twitter user Sinéad Canning said.
“No one in this country should have to angst over the cost when it comes to getting the healthcare or dentalcare they need, but they do. Our system is completely cooked.”
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