Not-for-profit health funds popular with younger members

Thousands of young Australians have bought private health insurance with not-for-profit and member-owned insurers.

Dance teacher Sena Tawia is just one young person who decided to take out private health insurance with a members health fund, bucking a downward trend. Picture: Stuart McEvoy

Young Australians are bucking a downward spiral in private healthcare by turning to not-for-profit or member-owned funds.

An extra 8238 people younger than 25 bought hospital cover from a not-for-profit or member-owned company in the three months to March. This compared with a decrease of more than 23,000 people who junked their policies from other private-sector funds in the same period.

Australian Prud­ential Regulation Authority data shows 9011 people under 40 bought hospital cover with a not-for-profit fund, while 58,445 people dropped cover with private-sector funds. There were fears of an industry “death spiral” if young Austral­ians continue to dump costly private­ cover while older people buy more expensive insuranc­e.

APRA previously questioned the long-term viability of private health insurance after board member Geoff Summerhayes said an inquiry should investigate whether insurers should be able to subsidise older policyholders with cheaper younger members.

APRA board member Geoff Summerhayes speaking at the annual Australian Council of Superannuation Investors in Melbourne. Picture: Aaron Francis.

The latest APRA quarterly private health insurance statistics showed 11,176 people aged 25-29 dumped hospital cover in the three months to March 31.

Members Health Fund Alli­ance chief executive Matthew Koce said despite the overall downward trend, there was a “very different story” for Members Health alliance funds.

“Younger people care more about values than any other generati­on,” Mr Koce said.

“They have access to more information and they are choosing to join Members Health funds.”

The coronavirus pandemic put health “front and centre” for young people and public hospital wait lists would “blow out astronomically” after elective surgery was temporarily suspended, he said.

Recent graduate Sena Tawia bought her policy with Australian Unity two years ago, leaving her parents’ fund. “I wanted to stay with a company that was focused on health insurance and not shareholders,” Ms Tawia, 26, said.

The Melbourne-based dance teacher said the COVID-19 ­pandemic made her think about upgrading from extras only to a combined policy that included hospital cover. “In the very beginning, it was kind of like: it would be great to have hospital cover right now,” she said.

APRA releases quarterly private health insurance statistics for March 2020 https://t.co/8sxxaaAfKS #APRA #insurance pic.twitter.com/yI8xV626Yp

— APRA (@APRAinfo) May 19, 2020