In what is fast becoming one of the rituals of Australian health debate, new quarterly data on private health insurance was published yesterday by the regulator, APRA.
Now the private health insurance industry and its allies, bemoaning how people don’t want its product, are demanding incentives and punishments to encourage people to purchase it.
A net total of more than 28,000 people abandoned private health insurance (PHI) in the June quarter. More than 90,000 dumped their hospital coverage in the year to June, and another 16,000 dumped their general coverage. The pandemic has only continued a trend of Australians working out that unless you’re a routine user of complex medical services PHI is a scam.
Of course, although there were falls in the June quarter across almost every age group, PHI is an intergenerational scam most of all, and younger Australians continue to work that out. About 16,000 people in their 20s dumped their insurance in the June quarter. Since 2017 more than 100,000 people in their 20s have ditched hospital cover; about 85,000 have ditched general cover.
The private health insurance industry and the Australian Medical Association — worried about the nation’s wealthiest doctors losing patients to the public hospital system — have called for changes to either force people into private health insurance or make it less of a scam for younger people.
The AMA wants higher taxpayer subsidies for insurance, a more punitive Medicare levy surcharge, and discounts for young people. Private hospitals want the age at which people start being punished for not taking out PHI — currently 30 — lifted to 35, because the penalties that increase each year are deterring 30-somethings from buying a product they wouldn’t otherwise buy.
That prescription contradicts the evidence from APRA’s numbers: the problem with the 30- to 34-year-old cohort isn’t that it’s not taking out insurance, but that it’s dumping it.
More than 23,000 30- to 34-year-olds dumped their insurance in the year to June, despite that cohort also being the group with the highest uptake due to the 30 years threshold. That is, you can force people to take out insurance with the threat of punishment — but you can’t stop them realising it’s a rip-off.
And it’s not clear why shifting the threshold to 35 won’t simply transfer any deterrence effect to people five years older.
The private health insurance rebate costs more than $6 billion a year and will be nearly $7 billion a year in 2022.
The AMA wants to add more than $1 billion a year to this in order to generate $1.5 billion extra revenue for PHI providers.
It is also peddling the claim that a “Ponzi scheme” exists that allows older people to avoid the 30 years penalties by not taking out PHI until they are in a position to obtain value from it in their 60s, a situation more correctly described as a rational choice reflecting the poor value of PHI, rather than an illegal pyramid investment scheme.
“Ponzi scheme” is much more apt for a system in which older Australians rely on unwitting younger people to fund their healthcare. For an economy that systematically sacrifices the interests of young people for older voters, that’s appropriate indeed.
Help us keep up the fight
Get Crikey for just $1 a week and support our journalists’ important work of uncovering the hypocrisies that infest our corridors of power.
If you haven’t joined us yet, subscribe today to get your first 12 weeks for $12 and get the journalism you need to navigate the spin.
Peter Fray
Editor-in-chief of Crikey
Leave a comment
Private health insurance will continue to decline in popularity so long as you can be slugged thousands of dollars in out-of-pocket costs even if you have the most comprehensive and expensive insurance you can buy. The system is fundamentally broken because it assumes people shop around for specialists and surgeons, when in reality they trust the referral they’re given by their doctor. Doctors charge as much as they like, confident that the insurance company will be blamed for not covering absolutely outrageous doctors’ fees.
Private Health Insurance is in it’s final throws. It is an expensive exercise in only providing for the rich doctors and satisfying their greed. Never has it been for the insured.
To propose more penalties is another attack on freedoms by the capitalist right of this country. We need to stop the subsidy scheme and make them compete like the other industries in this country. Who knows, we might get to see our specialists at a reasonable cost.
I have always believed in a universal health system. During my working life I was happy to pay the medibank levy albeit my accountant advised me that private health would have been cheaper. Experience also convinced me that the service for basic procedures were far more service orientated in the public system. For one procedure I went private and never spoke to, saw or met the specialist. On the next occasion I went public and every person involved explained their role in the procedure. A very good experience.
Now at 73 I contemplated private insurance. Curious about the levy. Now this is interesting. Why should I be assessed with a levy that has nothing to do with my previous medical history. Do they charge 73 year olds more for say milk. What happened to a competitive market. Imagine the cost of private insurance if JC were to arrive back on earth and took out private insurance – and he does not need it.
It is also discriminatory as it means that those with private insurance can get certain procedures performed and subsidized by the taxpayer for procedures not normally available through the public system. Why do the wealthy need government subsidies. Oh well it seems to be the way of the World today.
Corporate Australia has an absolute, complete, total, watertight, ironclad, indisputable, indomitable, immovable, resolute, righteous, pious and holy commitment to free markets.
Unless it’s losing money.
Agreed. Howard and co set the whole thing up for the big guys,telling the public that it was to give choice and a better deal to them. ‘Twas never so and it will soon be gone.
Anyone with half a brain or at least one that sits above their shoulders instead of between their legs like Trump can see that private health insurance is not fit for purpose as clearly shown by that “great” capitalist nation the USA and the clear failure of the privatisation of medical systems during the COVID-19 Pandemic. When are the morons in the LNP going to wake up.