Many people are either abandoning their private health insurance policies or downgrading to lower-cost, lower-benefit products as premium increases continue to outpace inflation and wage growth.
In its annual report into the private health insurance industry, the Australian Competition and Consumer Commission (ACCC) found Australians are increasingly dropping their hospital cover, instead opting for just extras cover.
Many people are also choosing policies with higher excess payments in an attempt to keep policy premiums to a minimum.
“People are increasingly feeling the pinch of private health premium increases and growing gap payments,” ACCC deputy chair Delia Rickard said.
“In response, many are shifting to cheaper products with reduced coverage, and some are dropping their cover altogether.”
The affordability of private health insurance has been an increasing concern for consumers in recent years.
Many insurers will be updating their policies ahead of the Australian Government’s private health insurance reforms, which aim to make private health insurance simpler and more affordable. This legislation will come into effect on 1 April 2019.
The ACCC is warning private health insurers they must provide clear, prominent and timely communication with customers regarding changes.
“Private health funds have clear obligations not to mislead their customers under the Australian Consumer Law,” Ms Rickard said.
“Failing to properly tell customers about cuts to their benefits or policies may be a breach of the law.
“Ahead of 1 April 2019, we will be monitoring to see how health funds are telling consumers about changes to their policies and benefits.
“Private health insurers need to be transparent about what is and isn’t included in their policies or risk losing their customers’ trust and ultimately, their business.”
YourLifeChoices members told us in our 2018 Retirement Matters Survey that private health cover was the second biggest drain on their income after energy costs. The survey also revealed that private cover was very important to most, with 70 per cent of survey respondents saying they have health insurance, and 81.5 per cent of that number saying they planned to maintain their cover for life.
Read the ACCC’s private health insurance report.
Is the cost of private health insurance too high? Have you stopped paying for private health insurance recently? What was the main reason for your decision?