Netflix moment? Millennials and Gen Z at forefront of a healthcare revolution

Young Australians have emerged from COVID lockdowns with a fresh perspective on their health – especially mental health – and it is putting them at the forefront of a revolution sweeping through the sector.

A report from the Australian Bureau of Statistics (ABS) this week highlighted just how prevalent the mental health issue is for all of us. More than one in five Australians have experienced a mental disorder in the previous 12 months. This rises to two in five for young adults aged 16 to 24.

“Almost half of young females (45.5 per cent) and one-third of young males (32.4 per cent) aged 16 to 24 years had a mental disorder in this period, with anxiety disorders being the most common,” says Linda Fardell, ABS head of health statistics.

Prudence Cullen: “Amongst my friends and I, mental health was the biggest topic.”Credit: Wolter Peeters

While the report did not look at any rise in mental health issues due to the pandemic, Sydneysider Prudence Cullen, who is fresh out of university this year and working in events management, can attest to the change in focus triggered by COVID lockdowns.

“Amongst my friends and I, mental health was the biggest topic,” she says. “When we were coming out of it [lockdown], it was more just like OK, can we get the help we need? What do we have to do to do that?”

One or two of Cullen’s friends started seeking help through the medical system, then “it kind of became a bit of a domino effect”, she says. It is not just the acute end of the mental health market, or health generally, that is experiencing this domino effect.

Major private health insurers are reporting strong demand for apps they have released to help deal with health issues. This includes apps for issues such as anxiety and problems with sleep.

Bupa have teamed up with mental health service This Way Up for internet-delivered cognitive behavioural therapy programs, while NIB has partnered with the Black Dog Institute. Medibank has its Better Minds app, which has helped drive a four-fold increase in virtual health interactions with customers over the past four years.

This fits into a wider trend of Australians prioritising their health. But more importantly, for the first time, they can wrench some control of their healthcare from the bureaucratic health system.

To say healthcare is having its Netflix moment might be a push, but the pandemic appears to have accelerated a trend that was already having an impact globally.

‘The time is much closer than we’ve realised, in which, if I’m not feeling well, I’ll have an e-triage device...’

NIB boss Mark Fitzgibbon

It is called the consumerisation of healthcare, and Australia’s private health insurers are crediting it with the sudden growth in young customers post-COVID despite the grinding cost-of-living pressures.

“This consumerism, which has been missing from healthcare for so long, which we’ve seen in so many other industries – think streaming services at home, on TV – it’s happening, and it’s happening rapidly,” NIB boss Mark Fitzgibbon told analysts and investors after the group’s full-year results in August.

“The time is much closer than we’ve realised, in which, if I’m not feeling well, I’ll have an e-triage device on my NIB app which advises me as to whether or not I should take a pill and lie down, have a day off work, go to the pharmacy or go to the GP, or call an ambulance. Then I’ll be able to have that consultation done virtually, in real time,” he said.

The consumerisation of healthcare is already having a big impact, says NIB chief executive Mark Fitzgibbon. Credit: Michael Quelch

Despite getting crunched by one of the worst cyberattacks ever seen one year ago, Medibank boss David Koczkar reported that the group topped 4 million customers for the first time last year.

Australians are cutting back on discretionary spending such as clothes and household goods, but private health insurance is no longer in this dispensable category.

“The cost of living pressures are real in the community, but people are prioritising the health and wellbeing. And we’ve seen 12 consecutive quarters of growth in the industry and actually the highest growth in customers with hospital cover under 30 in a decade,” he says.

“That is a dramatic turnaround from where the industry was four or five years ago.”

While Koczkar does not see the consumerisation of health as a new trend, he thinks the pandemic certainly gave it a boost.

“Health is one of the last remaining industries to really be shaped around the needs of the consumer. I think since COVID, though, there’s been a significant increase in interest in individuals’ health and wellbeing.”

Medibank says it has seen a significant number of customers using some of these new consumer-focused products and services in acute and non-acute medical support areas.

‘It’s no longer a toss up between...  do I go to the doctors and get my body checked out, or do I go see someone else and make sure I’m doing OK mentally.’

Prudence Cullen

This includes iMH, its new joint venture with mental health provider Aurora Healthcare to extend care beyond the hospital walls via telehealth and in-home care under the supervision of a treating psychiatrist.

“That’s a trend that we think will continue,” Koczkar says.

It still is not an easy sell for everyone. Melbourne-based university student Samuel de Zoete views private health insurance as a necessity to cushion any complications from having type 1 diabetes.

“Coming out of COVID and being immunocompromised, it’s having kind of immediate access to hospitals very much front of mind,” he says. But cost-of-living pressures mean his friends have other priorities.

“Car insurance is more important than health insurance [for them],” de Zoete says. Still, he’s noticed a change in attitude among his peer group since the pandemic to both physical and mental health.

This ranges from friends going for walks in the Dandenongs, to being mindful of not showing up to a party while unwell, and even proactively checking up on each other’s mental health.

Samuel De Zoete has noticed a change in attitude in his peer group since the pandemic to physical and mental health.Credit: Joe Armao

“We had R U OK day recently and a number of my friends messaged me to just ask the question, but also in turn, I asked other people as well,” de Zoete says.

He doesn’t know if any of his peers are accessing more formal mental health services, but concedes this is not something that would be talked about openly.

For Cullen, who has grown up with private health insurance via her family, there was never any doubt she would get her own now that she is working full-time.

Partly, it reflects her own health challenges, which include a possible endometriosis diagnosis after years of seeking help through the health system. It also reflects the peace of mind of being able to tackle physical and mental health challenges without breaking herself financially.

“I actually feel like I’m in a stage where I can actually put my health first,” she says.

“It’s no longer a toss up between... do I go to the doctors and get my body checked out, or do I go see someone else and make sure I’m doing OK mentally.”

Private health insurer HCF has noticed the trend. In two recent studies it commissioned with young, non-members looking at what they regarded as priority services, mental health came in ahead of traditional favourites such as physio, natural and chiropractic therapies.

“Mental health was significantly more appealing to 18 to 39-year-olds than older cohorts when considering which services they wanted included in their ‘extras’ policies. For them, it is the most important extras option after the core requirements of dental and optical services,” HCF says.

Australia’s ageing population has put unprecedented pressure on the health sector.Credit: Louie Douvis

Of the HCF members who accessed a free “healthy minds” check-in with a psychologist, more than one-third were aged under 35, with anxiety topping the list, followed by depression and the impact of loneliness.

And younger users are not always light users when it comes to private health insurance. Bupa reports that the average hospital claim benefit it pays for back, neck and spine for 18 to 34-year-olds tops $12,000.

Joint reconstructions are worth, on average, more than $4700 for this age group.

It is a big selling point for the private health insurance industry.

Medibank and NIB are making no secret of the fact that a growing waiting list for medical procedures in the public health sector is helping drive even young customers to its service.

“We don’t celebrate the fact that you may wait three years for a joint replacement in the public system, but it’s clearly driving the level of increased participation in private health insurance,” NIB’s Fitzgibbon says.

Consumerisation is also helping the public sector, says Koczkar.

He points to investment in prevention measures – about 700,000 Medibank customers have signed up for its Live Better program – as well as the delivery of healthcare to places where customers want it, such as in their own home rather than via a hospital bed.

Medibank estimates it has saved 170,000 bed days in the hospital system via these two measures alone. “It’s better care for consumers, and it’s more efficient for the system,” Koczkar says.

It is also slowly prising open the so-called jaws of death that were threatening to crush the viability of Australia’s private health insurers until recently. The economics of the industry relies on younger customers to offset the financial burden of older, more cost-intensive policyholders.

The issue is our ageing population, who become heavy users of their private insurance and put unprecedented pressure on the entire health sector.

At the same time, the gap between low wage rises and high premium increases highlights the affordability problem for younger members, many of whom chose – until recently – to leave the private health insurance system.

As younger people dropped out, the pool of remaining insurance members would get older and more expensive for insurers.

“The prospect of a shrinking, ageing and less healthy population of health insurance policyholders raises questions for APRA [the Australian Prudential Regulation Authority] about the industry’s long-term sustainability,” former APRA member Geoff Summerhayes warned in 2018.

This year, APRA executive Suzanne Smith said the sector had reason to be cautiously satisfied with its own health, but warned that Australia’s ageing population remained a long-term problem.

“We know that many of the industry’s long-term structural challenges remain; in particular, increasing pressure on insurance affordability as healthcare costs continue to outpace wages growth, and an ageing population with associated higher claims costs,” Smith says.

“Coupled with this is a challenging macroeconomic environment. Higher inflation, interest rates and workforce constraints put pressure on the costs of providing healthcare and on household budgets – pressures which could see those sustainability risks increase once more.”

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