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Health fund rise could leave seniors at risk

A potential hike in health insurance premiums has left leading seniors group National Seniors with fears that older Australians will be forced to downgrade or cancel their often much-needed health insurance.

High health insurance premiums could see seniors drop their level of cover (Source: Shutterstock)
High health insurance premiums could see seniors drop their level of cover (Source: Shutterstock)

The hike, which health insurers are currently preparing submissions for, is expected to take effect in April next year.

In a submission to the Senate Inquiry Value and affordability of private health insurance and out-of-pocket medical costs, National Seniors says the next price rise – around six percent – would come on top of soaring power prices and changes from last January to the Age Pension means test.

“Those changes adversely impacted around 30,000 part-pensioners, many of whom are now struggling to maintain health insurance,” National Seniors Chief Advocate Ian Henschke says.

“Our members have told us that they want to keep their health cover so they can avoid lengthy waiting lists in the public hospital system and have the doctor of their choice.

“But the higher insurance premiums mean they are downgrading their level of cover with products that have higher excess, co-payments and more exclusions, just to avoid dropping the private health altogether.”

Chief Executive Officer (CEO) Private Healthcare Dr Rachel David says that premiums increase every year because health input costs increase each year.

“No one likes to see premiums go up but health fund members continue to get value for their investment,” Dr David says.

“This year’s average premium increase (4.8 percent) the lowest in a decade, reflects the commitment of the industry and Coalition Government to delivering affordable healthcare,”

She adds that private health insurance is a critical element of Australia’s health care system.

“More than 13.5 million Australians have private health insurance and almost half of them have an annual income of less than $50,000,” Dr David explains.

“84 percent of Australians with private health insurance value the product, want to keep it and make considerable sacrifices to do so but they are concerned about affordability.

“Keeping private health insurance sustainable and premiums affordable ultimately benefits all Australians by keeping pressure off the public hospital system.”

The importance of private health insurance for older Australians is emphasised in National Seniors research, which shows 93 percent of people aged over 75 have at least one chronic condition, while 77 percent of people aged between 50 and 64 have at least one chronic condition.

“Most seniors with health insurance would have been paying their premiums for decades during which health funds would have reaped the benefits of fewer claims,” Mr Henschke says.

“Many of them could return from an unavoidable hospital stay or course of treatment and find themselves thousands of dollars out of pocket due to gap payments and product exclusions, which can be difficult and confusing to estimate. They usually come as a nasty surprise when making a claim.

“[We] are calling on the Federal Government to explore all options to improve the affordability of premiums, including the pricing arrangements between health funds and providers.”

With the calls for Government intervention, Dr David says that the cooperation between Government and the Private Health Insurance industry has delivered real results for consumers and adds that this is “just the beginning”.

“The ongoing work of the Private Health Ministerial Advisory Council and the Medicare Benefits Schedule Review, for example, will continue the reform process and the Public Health Insurance industry has agreed to pass on any savings from reform to consumers,” she says.

The submission process is expected to take 3-6 months with all submissions examined and reviewed by Government advisors and actuaries from both the Department of Health and Australian Prudential Regulation Authority (APRA).

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