Thousands of Australians ditch private health insurance in three months of 2020
Thousands of Australians walked away from private health insurance as elective surgeries were banned as part of the government’s response to COVID-19.
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Nearly 10,000 Australians dumped their health cover in the first three months of the year as elective surgery was banned because of COVID-19 and family incomes plunged.
The fall has plunged the already troubled sector into further strife with data showing the financial markets slump hit the profits of the funds which were 26.9 per cent lower compared to the same time last year.
Younger and healthier people were most likely to abandon their insurance while older people who are more likely to claim on their cover took it out data from the Australian Prudential Regulation Authority shows.
The largest net decrease (taking into account movement between age groups) was for the age group between 25 and 29, with a drop of 11,176 people official government data shows.
Just 43.9 per cent of the population now has health cover.
To free up hospital beds for a predicted surge in patients from coronavirus state and federal governments placed a ban on elective surgery which meant health fund members could not use their health insurance.
COVID-19 restrictions on physiotherapy, dental and other health services also made it hard for fund members to use their insurance for extras.
The measures meant health funds stand to save hundreds of millions of dollars in payouts to their members and official government data shows for the first three months of this year claims for hospital treatment fell by 7.9 per cent, claims for dental and other ancillary treatments fell by 1.3 per cent.
Surgery bans are now being slowly lifted.
To placate angry members who found they could not use their insurance during the COVID-19 lockdown the funds delayed planned above inflation April 1 premium rises.
And they promised to return any windfall financial gains they made from the surgery ban to their members but this may not happen until June.
“Compensation to members can only be calculated when funds have certainty about additional savings which will be late June at the earliest,” Private healthcare Australia chief Dr Rachel David said,
“In addition, health funds must remain well capitalised and prudentially sound throughout and beyond the COVID-19 crisis to fund the backlog of elective surgeries and allied health benefits,” Dr David said.
When they could use their health cover health fund members were forced to pay more out of their own pocket.
The average out-of-pocket (gap) payment for a hospital episode grew by 8.1 per cent since December 2019 to reach $324 in the March 2020 quarter, the figures show.
CHOICE Health Campaigner Dean Price said the statistics are further proof that Australians are giving up their health insurance in droves.
“Australians are voting with their feet and telling health insurers what they’re offering is poor value,” he said.
“Nothing has been done to address people’s concerns that private health insurance costs too much, is too confusing and offers too little value. In March 2020, CHOICE research found that 78% of people with private health insurance identify it as a key cost of living concern,” he said.