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?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.