It is no secret that private health insurance funds need younger members to be sustainable.
However, the issue of affordability is often at the forefront when those in the 20-40 age bracket are deciding to take out insurance.
There is often a mindset when a person is young, fit and healthy that they are indestructible and no adverse medical episode will happen to them. They often think the money would be better spent on a holiday, education, housing or energy costs.
Current participation rates of young people in private health insurance is low, while those over the age of 75 continue to rise.
When young people do have insurance, it is usually for general treatment services like dental, optical and physio or on basic hospital policies. The lower claim costs mean that they often cross subsidise the sick and elderly who make more frequent claims.
Because private health insurance is community rated, it means that everyone on the same policy pays the same premium irrespective of age or expected claims cost.
In an recent article for St.LukesHealth, Orthopaedic Surgeon Professor Bernie Einoder explained that while those aged between 15 and 35 had the lowest uptake of private health insurance they were often the highest users of emergency departments across the nation.
Professor Einoder said often after the initial emergency care, those with joint related injuries and musculoskeletal conditions received delayed care – meaning they were referred to a public patient outpatient clinic or put on a long-term waiting list for surgery.
“The unfortunate point is that people are on the waiting list for different reasons,” Professor Einoder said.
“For example, a 65-year-old retired man needing a hip replacement can afford to wait… Let’s take a 25-year-old man who has a knee injury and can’t work as a result. He certainly can’t afford to wait. Never for a minute did he dream he would need private health insurance, so he is not insured because he thought it was not going to happen to him.
“The problem is if you have a non-emergency issue and you don’t have private health insurance, you have to wait on a list to be treated as a public patient in a public hospital. You’ll have to wait longer than the average hip replacement patient because nobody perceived your minuscule problem in your knee as a life-threatening condition.
“But in fact, it is a significant problem and possibly a financially threatening situation. If you cannot pay off your house or pay your kids school fees because you have a cruciate ligament tear and you’re a window cleaner climbing up and down ladders all day, then you’re out of a job. There’s a whole stratum of conditions this applies to.
“I see young patients time and time again who have health insurance cover that is not adequate. If you’re covered for physio, chiro, orthotics or glasses that is all well and good, but you must have hospital cover that provides for a doctor of your choice and it must be a policy that’s the appropriate level of cover.
“There are many problems and conditions that do affect young people and their working lives. Things that can’t always be foreseen and it is a problem because when we are young we think we are indestructible.
“The price of free public care for our youth is delay, pain and a loss of income, which can also lead to the breakdown of relationships. It may be a non-emergency but it’s going to be bad enough to interfere with your work commitments, family and sporting life.”
The Australian Government is working alongside the private health insurance industry to deliver a package of reforms that aims to put downward pressure on premiums and make it easier for consumers to afford private health insurance.
The government’s Lifetime Health Cover initiative is designed to encourage people to take out hospital insurance earlier in life and maintain that cover to avoid a 2 per cent loading on your premium for every year you are over 31. Changes have also been made around prostheses and improved access to mental health services.
There are also moves by the government to introduce discounts on private health insurance premiums of up to 10 per cent for those aged 18-29 from April 2019.
Regardless of whether you are young and healthy, or suffering from a chronic health condition, private health insurance provides peace of mind when unexpected health episodes arise.
- St.LukesHealth CEO Paul Lupo