Has private health insurance become unaffordable?

Can older Australians continue to afford the rising cost of health insurance?

How unaffordable is health insurance?

Do you have private health insurance? Seventy-one per cent of respondents to a YourLifeChoices survey say they do, and more than three-quarters say they intend to maintain that throughout retirement. But how realistic is that? Can you really afford to keep paying for your insurance?

Private health insurance premiums are rising at twice the rate of the average income. This is especially hard for those on a fixed income, such as retirees, who have to plan for ever-increasing premiums with ever-dwindling funds.

Although we know that healthcare is a major expense for older Australians, new research from CompareTheMarket shows the areas in Australia that have the highest concentrations of people paying the most for private health insurance. In some cases, these communities are paying 50 per cent more for their private health insurance than those in surrounding areas. It’s no surprise that the majority of residents in these postcodes are retirees.

CompareTheMarket says: “Brisbane’s Bribie Island, which has a huge retirement community, pays 50 per cent more for their health insurance compared to their city’s overall average. Looking to Melbourne, and Dingley Village residents could be paying 45 per cent more for their health cover.”

In CompareTheMarket’s survey of sales data across Adelaide, Brisbane, Melbourne, Perth and Sydney, more than two-thirds of over-65s said they were struggling to pay for their health insurance, to the point where they were forced to cut back on other spending, such as groceries and leisure activities, to pay for it.

This is in line with what YourLifeChoices members tell us. In our financial literacy survey, 25 per cent of respondents said private health insurance was the single biggest challenge to living within a budget.

More than half said that private health insurance was too complicated to understand properly. And if you find private health insurance complicated, how can you negotiate a better price?

It’s not a new idea, but sometimes a reminder can be helpful – talk to a person. Pick up the phone, call your private health insurance provider and check some basics. Ensure you are not paying for unnecessary costs, such as pregnancy extras or family members no longer living with you.

Once you’ve made sure you have the right product with your own insurer, call some competitors and see if they can beat the price. Then, if you don’t want to bother changing over, call your own provider back and use the new quotes as leverage to get a better deal. Ask if they will price-match.

Sometimes, this approach is better than using a comparison site as not all companies are necessarily represented on such sites.

By speaking with a person, you can ask them to explain any legalese in simple language and you get the benefit of their knowledge. Just be sure to ask for a receipt number for your call, and then you have proof of what was said in case the insurer tries to go back on it later. It’s a win-win.

What do you think? Should more be done to reduce the burden of private health insurance? Or should we be improving the public system, so it’s not an issue?



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    26th Jun 2018
    The money the government spends subsidising the private health insurance of taxpayers should be put into the public health system instead.
    Working people can afford the private health insurance and they get a rebate for the cost on their tax, pensioners do not have enough income to pay tax so they cop the full price of the insurance with no rebate which is very unfair in my opinion.
    It is also a disgrace that our gov't approves of the health insurers raising the cost of the insurance by anything up to 10% per year when the insurers should be giving a bonus to those who pay their insurance and make no claim on that insurance during the year.
    26th Jun 2018
    Good one Autumn Oz! I'm all for removing the private health insurance subsidy for working people (earning income over a reasonable threshold) - BUT NOT FOR THOSE ON A PENSION!!! We can barely afford to keep it now and if we all decided to drop it, the public health system would be unable to cope with the enormous extra demands - here in SA it barely copes now with emergency services and elective surgery with waiting lists of months, even years. So making PHI more expensive for pensioners (and I mean those whose sole income is the pension, not those retirees who have substantial super + a pension top-up) is false economy indeed.
    26th Jun 2018
    Autumnoz you need to get your facts straight. If you are eligible for the government subsidy towards your health insurance you get it regardless of employment or pension. If that subsidy was removed for lower income families and pensioners in particular many would opt out of private health insurance which would place even more pressure on the public system. The amount paid in subsidies would note even make a dent in the cost of that extra pressure on the public system.
    12th Jul 2018
    I agree with you Dancer and Autumn Oz. If you have not used your health insurance within the tax year even for pensioners we should be rewarded with a tax credit,
    26th Jun 2018
    We do have private health insurance and we are keeping it. I don’t find it at all difficult to compare and shop around. Ours includes free day surgery which is a huge incentive for us as many things are now done in the one day. If an item is covered by Medicare our insurer covers it so that is pretty simple. It is up to us to choose our specialists and surgeons and hospitals to ensure they are doing the right thing. Look for reviews and ask for an upfront quote and ask for bulk billing because they are out there. It is not hard to do and people should always be allowed choices and we choose to have private cover.

    26th Jun 2018
    Why waste money on health insurance? It's a scam.
    26th Jun 2018
    Private health insurance a scam? You'd have to be joking. I had a total knee replacement in January. When seeing the surgeon in October last year, if it wasn't for us going away for three weeks in November, I could have had surgery done the next week. A friend of ours has no health insurance and has the same problem as I had. She was told in October 2017 that she couldn't have the TKR until next month a 10 months wait. As well, since 2008 my wife has had four major and one minor surgery and I have had three major surgeries and most likely will have to have my other knee done within the next two years. Cost wise for all the completed operations and hospitalization, about $1500. Not bad you would have to agree? We would never relinquish our private health cover based purely on cost. The public health system is a joke - long waits and often inferior surgery and hospital accommodation.
    The only time I would say that private health is expensive (not a sham) is if you are lucky to be in good health and haven't required any extensive surgery, hospitalization and rehabilitation, which we have required.
    Private health isn't a sham when one is nearly 77.
    28th Jun 2018
    robmur - "$1500, not bad", but in the public system free. You paid premiums for who knows how long PLUS $1500.

    Is it the end of the world to wait 10 months for the op. Inferior surgery, how do you know, does your GP refer you to their "mates" to line their pockets? We pay $6500 per year for health insurance but just can't see the value. My wife has had a few accidents recently, broken different bones/shoulder and all stays have been in public hospitals with excellent results.

    26th Jun 2018
    We are keeping our health insurance because we want to. We understand that others are against health insurance and that is their right and we don't need any advice to help us make a decision on health insurance. Interestingly, CompareTheMarket is quoted throughout this article yet they have less than half of the health insurers signed up to their company. That means that when comparisons are made to see where the best deal is that less than half of the health insurers are checked. So can we assume that their statistics are incomplete and, therefore, incorrect?
    26th Jun 2018
    Do your own research. Just use the list of health insurers from the government site then look through them yourself.
    It is time consuming for sure but worth the effort to find the right one for you.
    Check out reviews and experiences and who owns it. Look at what they cover and details of that because it can be very sneaky.
    Some small ones are actually better than the big ones.
    Ours is a Tasmanian not for profit that covers day surgery with no excess. They cover everything that Medicare covers which some of the big ones do not.
    beyond caring
    26th Jun 2018
    like many Aussie we have had P.H.I for years and never before considered not having P.H.I. however as part pensions with the increasing costs we are now near ready to drop out. just at a time in our life when we should be in P.H.I. and that's just what the P.H.I. industry want older people, that have paid for years is to GO oooo ... they just don't want us, they know we will now need what we have been paying for over the years. So now we're are being priced out of P.H.I the thing we don't get is why the Govt doesn't do something about it. we like many are going to end up in the Public system.
    26th Jun 2018
    Private health insurance must fail, there has be a point where only the rich an afford it.
    2nd Jul 2018
    Yes floss. The crunch must come at some point if this debt laden deflation continues. The Insurers will go under taking all the promises with them. Not much hope if your insurer goes belly up.

    I still keep insurance, have done for decades and just use the dentist and optometrist. It won't surprise me if the promises are broken. Seems a promise isn't a promise any more anywhere.
    12th Jul 2018
    It is only just affordable. I rang my health insurance provider to check on coverage. Eye surgery not included as I would have to go over to anther cover which would send up the cost by $6.00 On a pension, Have to save another hip replacement for the out of pocket expenses, Th waiting list in Sa is too long fin Sa for hip replacements, I am glad that Medicare pays for all the other expenses such as endless x-rays and blood tests and free physiotherapy after hospital otherwise I could not afford to keep up health insurance.Older people use the system more . It I high time that premiums were capped particularly for pensoners.0...

    Just affordable. It is high time the government capped premiums particularly for pensioners as we use the health system more. I am thankful that the government does pay x-rays blood tests and free physiotherapy after hospital otherwise I would not be able to afford to have another hip replacement so soon. Along wait in SA.