Health insurance on slide as Bupa reveals post-pandemic claims surge

As the take-up of private health insurance falls to its lowest levels since 2006, insurers warn of a post-pandemic surge in new claims.

The greying of ­private health policyholders is a concern.

The number of Australians taking out private health insurance has fallen to its lowest levels since 2006, with the sector feeling the squeeze from a cutback in non-­essential spending as the economic slows.

Data released on Thursday by the Australian Prudential Regulatory Authority showed private health hospital coverage of adults declined from 44.7 per cent in 2018 to 44 per cent last year.

Coverage declined across almost all age groups, except the over 70s, whose coverage lifted by as much as 8 per cent.

The latest figures are on top of already low rates of coverage for people younger than 30 years old.

The greying of ­private health policyholders is a concern, according to Canstar financial expert Steve Mickenbecker, who warns the shifting of policies towards the elderly is ­driving the exit of younger people.

“The age group mix is pretty disturbing. The only cohorts that are rising are those over 70 and this is two years in a row and that’s incredibly worrying for the industry,” Mr Mickenbecker said.

“If not for the tax situation, the Medicare health insurance surcharge, there’d be an acceleration of that trend dramatically and a lot more people would be moving out of the industry.”

In general, health insurers need to attract young members, who generally make fewer claims than older members. At the same time, health insurers are being squeezed by the rising cost of hospital stays and medical devices.

Mr Mickenbecker said other APRA data showed a large number of claims were made by those over 70, leaving many young ­people footing the bill.

“The real problem the health insurance industry has is that the only growing cohort are those making a huge number of the claims,” he said. “There will have to be something major done to reverse the slide.”

Thursday’s APRA data comes as many insurers are seeing a resurgence in claims as many states exit their coronavirus shutdowns.

Bupa managing director of health insurance Emily Amos told The Australian that claims were running ahead of those made at the same time last year.

“We’re now seeing a strong and sustained bounce back in claims, which are sitting around 5 per cent above last year’s levels,” Ms Amos said.

“This is because the vast majority of elective surgeries and ancillary treatments which were scheduled during the six-week lockdown were deferred, rather than cancelled.”

Ms Amos said the major drivers of hospital claim growth were a 23 per cent increase in bone, joint and muscle surgery, and a 14 per cent increase in payments for knee and hip replacements.

The insurer has also seen a boom in home care, with its chemotherapy at home program recording a 343 per cent rise in take-up over the lockdown period.

“We paid out more than $280m on almost 100,000 episodes of hospital care for around 70,000 members during the first lockdown period,” Ms Amos said.

“While overall claim numbers dropped, the types of procedures that continued were complex and expensive.”

APRA has warned insurers they cannot bank savings from any money not spent on treatments missed over the lockdown period.

Several insurers are offering cash refunds to members who had their access to extra services restricted during the COVID-19 lockdowns.

AIA Health Insurance said it would give members a minimum 50 per cent refund on extras policy from April to the end of the year, minus any claims made.