Need to know
- Recent research by the advocacy group National Seniors Australia shows many older Australians struggle to afford private health insurance
- Among those on the full pension with no other income, 45% reported having no private health insurance at all
- National Seniors is calling for a review of the sector to 'identify ways to improve its value proposition to policyholders in general and older policyholders in particular'
Like many Australians, Diane Bunworth has had private health for decades and paid tens of thousands in premiums along the way.
She's now 76, a time when the cover could really come in handy, but her policy has become increasingly expensive, right up to the brink of unaffordability. The best way forward is not clear.
"Our current monthly premium is $462, that's a big dent in our age pension," Bunworth says. "If we drop a tier and pay a lower premium, we risk losing cover for procedures often needed for people at our stage of life."
Recent research by the advocacy group National Seniors Australia (NSA) makes the case that many older Australians are facing such a dilemma.
Half of policyholders over 50 find it hard to pay
The NSA survey of 4500 people aged 50 and over shows that much of this demographic believes in the necessity, if not the value, of private health insurance, above and beyond what's provided by the public system.
More than nine of 10 who had health insurance said it was important to them, and around the same number said they planned to keep it for at least the next 12 months. Most of these people want the cover to help pay for private hospital costs, or to reduce waiting times for elective surgery.
Our current monthly premium is $462, that's a big dent in our age pension
Private health insurance customer Diane Bunworth
But just over half of these policyholders said they would have to juggle their finances or find a better deal to afford paying for the cover.
And for some, the premiums are simply too high, leaving them with no cover. Among those on the full pension with no other income, 45% reported having no private health insurance at all.
More than seven out of 10 of the Australians surveyed by NSA who don't currently have insurance reported that they used to have it but let it go, mostly because they couldn't afford it, didn't see the value, or both.
Government review of the sector in order
National Seniors Australia CEO Chris Grice says the private health insurance market is failing many older Australians and should be subject to a thorough review by the Productivity Commission.
With the steep premium increases of recent years, along with growing out-of-pocket costs for people who do have private cover, "the inquiry should identify ways to improve its value proposition to policyholders in general and older policyholders in particular," Grice says.
Those who do have it, are paying more for less and make sacrifices in other areas to hold onto it
National Seniors CEO Chris Grice
"Our research reveals that while most older people want and need private health insurance, the rising cost of premiums and out-of-pocket costs for private health undermine its value. Those who do have it, are paying more for less and make sacrifices in other areas to hold onto it."
Increasing rebates might help
NSA would also like to see an increase in the private health insurance rebate for people on lower incomes.
"Increasing the PHI rebate for lower income households will help those most at risk of dropping PHI to hold onto it and the benefits it provides," Grice says.
Another recent survey, by the Australian Patients Association, revealed that private health insurance costs are the number one financial concern for those 65 and older.
Meanwhile, Diane Bunworth and many other older Australians remain in a tight spot.
"Letting go of private health and losing the security it provides isn't a decision we would take lightly but it is a decision we reluctantly may be forced to make."
Stock images: Getty, unless otherwise stated.
