New data shows Aussies can no longer afford private health insurance

Feeling the financial stress

Private health insurance isn't making Aussie budgets. Image: Pexels

We're already making changes to so many areas of our lives to deal with the cost of living crisis. Now, hundreds of thousands of people’s healthcare is being impacted by rising prices.

Some people are cutting back on buying meals while out, shopping secondhand more often, cancelling gym memberships or saying no to event invites. But new data from the Australian Government suggests many are also reducing their private health cover in an attempt to save money, despite public hospital waitlists continuing to grow. 

According to the report, between December 2020 and the end of 2023, the amount of people choosing the top-level gold private health cover dropped by over 400,000, with more people opting for silver and bronze cover.

In fact, CEO of Private Health Australia, Rachel David, told the ABC over 216,000 policies have been downgraded in the first half of 2024 alone. 

Many of us aren’t expecting to make a visit to the hospital anytime soon, so it’s understandable why insurance would be sacrificed to boost savings. But Dr David says "people are still relying heavily on the private system”, and are “desperate” to keep their cover despite struggling with the cost of premiums.

Health economist Rosalie Viney is one of the hundreds of thousands of Australians who have reconsidered their need for high-level private health cover, telling ABC that even though she had to pay some specialist fees out-of-pocket, she saved money by dropping her level of cover before an operation.

She retains a “pretty huge amount” of about $2000 a year after downgrading from a ‘gold’ to ‘silver plus’ premium.

The health system could be impacted Image: Getty

While many of those reducing their coverage might not need to make a claim in the near future, Dr David warns the health system’s stability could be impacted if there’s a surge in people getting rid of their private health insurance altogether. 

"If roughly half the population has it, then the system is stable," she says. "If that starts to drop, what we see is pretty much an immediate pressure on public emergency departments and waiting lists.”

So if you're thinking about pulling the pin on your coverage, may we suggest turning your attention to other cost-cutting measures in the meantime? With a new Covid variant descending on Australia, opting for bronze or no private health coverage, might not be the best solution.

Originally published as New data shows Aussies can no longer afford private health insurance