Health advocates fearful of ‘healthcare now, pay later’ scheme

Sceptics issue warnings to the financially vulnerable.

Health advocates fearful of ‘healthcare now, pay later’ scheme

The cost of healthcare is one of the top two concerns of older Australians, which makes Afterpay’s latest announcement both a good and a potentially troubling move for consumers.

The buy-now, pay-later company is expanding its services to include healthcare, which will help finally challenged Australians cover the increasingly hefty out-of-pocket costs of many specialist health services. Only last week, national chief medical officer Professor Brendan Murphy vowed to investigate the possibility of punishing specialists who charge unnecessarily high fees and the Actuaries Institute said the lack of transparency around specialists’ fees was undermining the health system.

Afterpay has added 1100 dentists and optometrists to its books in the past 10 months and will now trial the financing of radiology, pharmacy and general practice services. However, the fear in some quarters is that financially vulnerable patients desperate for medical treatment may suffer if they cannot meet the repayments.

Afterpay’s Head of Healthcare, Matthew Cagney, said the move was prompted by the growing number of people dumping their private health cover.

“With more than 11 million Australians not having access to ‘Extras’ cover, we are meeting a genuine need – and for those who do have cover, there is nearly always going to be a gap payment that needs to be made,” he said.

He argued that the service would allow Australians to better manage their household budgets, as the bills would be split into four fortnightly payments.

While those payments are interest free, missed payments incur a $10 late fee, and an additional $7 fee if they are still unpaid seven days later. Late fees are capped at $68 or 25 per cent of the original price.

Consumer advocates are sceptical.

Professor Rosalie Viney, of the University of Technology Sydney’s Centre for Health Economics Research and Evaluation, says the move could lead to patients paying for services they can’t really afford.

“If you only have to pay a portion at a time, you might go ahead with it, even though you may not be able to afford it,” she said.

“A $400 bill doesn’t look like much when you’re only paying $100 at a time. But it’s easy for those costs to creep up.”

Consumer Action Law Centre policy officer Patrick Sloyan said he had seen increasing number of people on low incomes racking up debts using buy-now pay later services.

“We are concerned that the same harms will occur as Afterpay rolls out to healthcare,” he said.

ASIC reviewed buy-now, pay-later providers such as Afterpay in 2018 and found that one in six users reported a negative impact, such as being overdrawn, having to delay paying bills or borrowing money from friends to meet scheduled repayments. More than half said they ended up spending more than they did before they used a buy-now, pay-later arrangement.

Afterpay reported in December that 17 per cent of its revenue came from late payment fees.

Have you used Afterpay? Was it a success? Would you use it for health services?

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    COMMENTS

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    Pisces
    14th Jun 2019
    10:34am
    Warning when something sounds too good to be true it usually is. How is this not loan sharking???
    TREBOR
    14th Jun 2019
    10:54am
    Sickday Loans... come on down to Double Cost Joe's Emporium (not to be confused with Double Down Joe's Treasury Loans) - 36 months interest free! (fees and conditions apply)
    Sundays
    14th Jun 2019
    10:56am
    Maybe if you’re disciplined and receive a regular pay packet, this could work. However, if you’re sick and there is no income, it will plunge you further in debt. Afterpay is a huge trap as late fees are very high.
    Tom Tank
    14th Jun 2019
    11:22am
    In our capitalist society companies do not offer anything out of the goodness of their heart there is always a profit motive with the demand of a return on their investment. The degree of that return may be reasonable but these days the financial price charged bears no relation to the cost of providing whatever product is on offer, except it will be above that cost.
    These days it is usually based upon what the market will stand and that can provide outstanding profits.
    Tom Tank
    14th Jun 2019
    11:22am
    In our capitalist society companies do not offer anything out of the goodness of their heart there is always a profit motive with the demand of a return on their investment. The degree of that return may be reasonable but these days the financial price charged bears no relation to the cost of providing whatever product is on offer, except it will be above that cost.
    These days it is usually based upon what the market will stand and that can provide outstanding profits.
    Paddington
    14th Jun 2019
    11:28am
    Afterpay is great actually! We use it when we shop at Target and similar as it spreads out small amounts from your shop. It just divides it into four fortnightly payments with no interest. Use it just for small amounts and the payments are $15 or $20 but it helps.
    It is nothing like payday loans because you could pay but it makes it easier to budget.
    For example, purchasing sheets and blankets etc for the winter is a fairly big purchase out of one pension payments but more doable spread out.
    Pensioners don’t deal in big amounts so it is fine. I was sceptical at first but now tick it every time it is offered but as stated the whole amounts are not huge but big enough when you only have the pension.
    Sundays
    14th Jun 2019
    11:43am
    Paddington, you’re using it the right way. Many can’t. Speaking to the young apprentice hairdresser and the lure of it is only $20 a pay, means she has spent up and now has a debt she can’t afford
    Paddington
    14th Jun 2019
    11:57am
    You are not pressured to do it. It just pops up as one choice but you have to have recorded your details ahead. I don’t feel I have to choose that at all. People make a conscious choice with no incentive to do so.
    Arvo
    14th Jun 2019
    12:48pm
    The problem with the government laws and control is that it introduces new laws but does not extinguish old laws. With over 200 years of horizontal and vertical array of accumulated laws, lawyers have lengthy field days with litigation and legal defence in courts...which they enjoy...at $600 in 6 minute blocks, who wouldn't.
    GeorgeM
    14th Jun 2019
    11:44am
    There are two issues with the statement from Afterpay “With more than 11 million Australians not having access to ‘Extras’ cover, we are meeting a genuine need – and for those who do have cover, there is nearly always going to be a gap payment that needs to be made,”.
    First, is it only for Extras, and not hospital treatments? The article suggests they are extending it to other services - that MUST be stopped. If people don't have Extras cover, that's their choice, and so is their choice to use Afterpay.
    Second, the key issue are "Gaps". The Govt MUST come hard on this so-called "Insurance" industry, which offers insurance but only up to certain low levels of costs. That is a con, and NOT insurance, as insurance MUST bear the risk for ALL costs, not a fixed part of them with patients essentially bearing the risk for the rest of the costs.
    For both points, the ball is (should be) now in the Govt's court to regulate these matters - will they? Ha! We need Citizen Initiated Referenda approach in our democracy to force such policy changes, as BOTH major parties are as usual missing in action.
    Pisces
    14th Jun 2019
    12:21pm
    Totally agree about time the government stepped up and did something POSITIVE for us the people
    Paddington
    14th Jun 2019
    11:59am
    It is like saying people cannot have credit cards. People choose and some have no self control or common sense but should all credit cards be banned?
    JW
    14th Jun 2019
    10:17pm
    Too true Paddington. It’s like right-hand arrows. There for the people who can’t make the right decisions.
    Life experience
    14th Jun 2019
    1:24pm
    It’s cheaper than a credit card debt. If they hit afterpay hard then credit cards should be banned. I think it’s great for people who live from pay to pay. Helps them budget.
    Credit cards are much more harmful