Hordes of young Australians are abandoning their private health insurance policies after the coronavirus pandemic left health funds charging people for services many could no longer use.

Hordes of young Australians are abandoning their private health insurance policies after the coronavirus pandemic left health funds charging people for services many could no longer use.
Key points:

  • Data shows about 11,000 people aged between 25 and 29 abandoned private health insurance
  • Drop coincides with the introduction of Government restrictions on services because of COVID-19
  • Consumer advocates say nothing has been done to address people’s concerns with sector

In the first glimpse of the impact of the crisis on the private health insurance industry, the latest data shows almost 11,200 people aged between 25 and 29 dumped their private health insurance in the three months to March 31.
While there were increases in cover among some Australians, such as people aged between 70 to 79, overall, the Australian Prudential Regulation Authority (APRA) statistics showed about 9,800 Australians dropped their private health cover over the three month-period, as restrictions set-in, and the economic consequences of the pandemic began to hit.
The trend of young people fleeing the sector has been a continuing concern for those within the industry and the government, who fear the health care system could find itself in a “death spiral” if young and healthy people continue to abandon cover.
The fall in policies coincided with the introduction of the Government’s coronavirus restrictions, and the subsequent economic consequences of the pandemic.
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Consumer group CHOICE said the full impact of the crisis on the rate of private health insurance coverage would be seen in next quarter’s statistics, with the latest data only taking into account the beginning of the pandemic.
But CHOICE Health Campaigner Dean Price said even before COVID-19, the statistics were dire.
“It’s no wonder nothing has been done to address people’s concerns that private health insurance costs too much, is too confusing and offers too little value.”
The coronavirus pandemic saw the Government put a stop to all “non-urgent” elective surgeries to conserve valuable resources like personal protective equipment (PPE) and help the health system prepare for an anticipated influx of patients.
Some routine services like dental and eye care were also cancelled, as clinics prioritised urgent cases or shut down all together.
It meant health funds were charging people for services many were no longer using.
The APRA statistics showed, as a result, there was an almost eight per cent decrease in hospital treatment benefits compared to the last quarter, while total benefits for medical specialties were also down about eight per cent.
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Health funds bracing for ‘backlog’ of claims
The CEO of Private Health Care Australia, Rachel David, said if the drop in benefits paid meant health funds were sitting on additional profits, they would look to pass that on to members.
“Health funds gave a commitment that any additional funds resulting from COVID-19 related restrictions causing cancellation of some elective surgery and some allied health services would be returned to members,” Dr David said.
She said now the government had given the green light for elective surgeries to resume, the industry was bracing for a surge in claims.
“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.”
Health funds have acted to soften the financial blow of COVID-19, delaying a scheduled premium increase and reducing or cancelling waiting periods for people to make claims.
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Dr David said any Australians who were still suffering financial hardship as a result of COVID-19 were encouraged to contact their health fund directly to discuss other options.
But CHOICE reignited calls for a review into the system, accusing the industry of dragging its feet in passing on profits to consumers.
“Policies that were poor value before COVID-19 have only become worse value as the industry dithers on returning their unexpected windfalls back to their customers,” Mr Price said.
“The Australian Government must review the whole system by undertaking a thorough public inquiry.”
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