Health insurance overhaul needed, advocates say

Older Aussies are less satisfied with their health insurance than ever before – but most still stick with out of necessity, research has found.

A survey compiled by seniors advocates National Seniors has revealed four out of five (81 per cent) people aged 55 and over hold some form of health insurance – but those people do so out of necessity, are largely unimpressed with their coverage and feel it is getting worse.

Why have cover if you’re not happy?

As for why people are sticking with their cover when they’re not satisfied, reasons given included reducing wait times for elective surgery, covering major hospital costs and even emotional reasons like wanting peace of mind.

Of the people who have private health cover, 96 per cent said it is ‘important’ to them, 76 per cent said it was very important and 95 per cent said it was likely they would maintain their current level of cover for at least the next 12 months 

But while reasons for keeping cover were fairly standard, reasons why people felt dissatisfied with their cover were as varied as people themselves.

What was consistent, was a feeling that customers are being ripped off. That premiums keep increasing, while cover keeps decreasing.

What are people unhappy about?

In particular, so-called ‘gap fees’ and other out-of-pocket costs frustrated survey respondents and they were listed as the number one thing they felt dissatisfied with when it came to their insurance.

Chris Grice, National Seniors CEO, says many older Australians make sacrifices in other areas of their lives in order to afford private health cover.

“There is a growing discourse about the unaffordability of private health,” he says.

“This must be addressed to preserve private health as an option for older people facing ever-rising living costs,” National Seniors Australia CEO, Chris Grice, urged. 

“Our research reveals while most older people want and need private health insurance, the rising cost of premiums and out-of-pocket costs for private health undermine its value,” he says.

“Those who do have it are paying more for less and make sacrifices in other areas to hold onto it.”

Specifically, 53 per cent of respondents said they needed to use cost-saving strategies in order to maintain cover. One third of these (37 per cent) said they used ‘shopping around’ as their main cost-saving strategy but just one-fifth (22 per cent) said they would reduce other spending to keep private health insurance, showing people are very reluctant to give anything else up.

Most vulnerable being priced out

Although most people have cover, the data showed 19 per cent of older Aussies have no private health cover at all, and it’s all down to how well off you are.

Of the different income brackets surveyed, 45 per cent of those on a full pension had no insurance, compared to just 16 per cent of retirees with their own funds.

Thirty-five per cent of people who still had a mortgage also had no insurance, compared to only 14 per cent of those who own their home outright.

Perhaps most concerning of all, National Seniors found that the people with the poorest health were the most likely to have no private health insurance.

Mr Grice says older Australians giving up their private health will mean a greater burden on the public health system.

“If older people drop out of private health this will lower premiums,” he says.

“However, the impact on the public system is it will require more funding and taxes to support the influx of older, sicker patients. Good for private, bad for public.” 

Change is needed

In response to these findings, National Seniors is calling on the government to take meaningful steps towards addressing the affordability and value and wants the Productivity Commission to conduct and inquiry into the private health system.

They want the inquiry to focus on identifying ways to improve the value proposition of private health insurance to policy holders in general and older policy holders in particular. 

“Despite several reviews, nothing has changed. Private health insurance holders continue to face premium increases, product limitations, and soaring out-of-pocket costs,” says Mr Grice.

National Seniors is also proposing a ‘private health insurance rebate’ for people on lower incomes and the introduction of a seniors dental scheme.

“NSA is also calling for an increase in the Private Health Insurance Rebate for people on lower incomes to help them maintain cover,” Mr Grice says.

“As our research confirms, these are the people who are most likely to consider dropping private health insurance.” 

Are you happy with your health insurance policy? How do you think the industry could improve? Let us know in the comments section below.

Also read: Why older Australians should think twice before dumping their private health insurance

Brad Lockyer
Brad Lockyer
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.
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