More than a quarter of a million Australians abandoned their private health insurance in the year to March 2018, according to new research from Roy Morgan.
This has jumped from 182,000 in the same period in 2017 to 256,000 and is the highest number in the past five years.
The Roy Morgan Single Source survey of more than 50,000 consumers found that cost was the main reason for members dropping out. This has risen to 53.3 per cent, up from 47.1 per cent in the previous year.
The gap in out-of-pocket expenses was the second biggest factor. This leapt from 12.8 per cent last year to 19.1 per cent.
Nearly one in six (15.5 per cent) members who didn’t renew said that “Medicare suits my needs”, up from only 5.3 per cent last year, indicating that an increasing number of people see no real value in having private health insurance.
Over the year, there was also an increase in concerns regarding service, with 11.6 per cent saying they didn’t renew because of “poor service”, up from 2.3 per cent the previous year.
Roy Morgan Industry Communications Director Norman Morris says: “With a great deal of negative publicity being given to the rapidly rising cost of private health insurance, it is not surprising that the major reason given for not renewing is to do with the increasing expense for many households.
This research has shown that apart from the cost of health insurance being a major problem for customer retention, it should be related to the perceived benefits or value of paying increasingly high premiums.
“With a large proportion of individuals who leave saying that there remains a major gap for them to pay (i.e. “too much out-of-pocket expense”) and “Medicare suits my needs”, there is major doubt among many members regarding the current value to them of retaining their private health insurance.
“It is up to the health funds to communicate the value of having private health insurance over just relying on Medicare.
“Our research on member satisfaction with private health funds has shown major differences in satisfaction across funds and as a result the poorer performers could learn from the top ones and so improve their chances of member retention.”
In YourLifeChoices latest Retirement Income and Financial Literacy 2018 survey, half our members told us that health insurance policies were too complex for them to understand. Of all provider plans, including phone and energy offerings, health insurance was seen as the most difficult to navigate.
Just 27.5 per cent of respondents felt comfortable with their level of understanding of their health insurer’s policy.
Given that 72 per cent of our members say they have private health insurance, the number who consider their policies unnecessarily complicated is significant.
While some policyholders resign themselves to ‘trusting’ their insurance companies – in part because of the challenges of shopping around for a better deal – the fact remains that many are very unsure if the product they have purchased is fit for their purpose.
Have you abandoned your private health cover? Are you concerned about out-of-pocket expenses?
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