APRA data shows the number of people aged 20 to 34 with health insurance has dropped by 11 per cent over the past five years, leaving funds with the higher cost of care for older, sicker members in what Grattan Institute health economist Stephen Duckett has called a “death spiral”.
Health Minister Greg Hunt is looking for ways to help insurers lower their costs so they can keep a lid on premium rises, and last month knocked back 20 funds’ application for an average premium increase of 3.5 per cent from April 2020, and is seeking an average rise of no more than 3 per cent.
Dr Bartone said the government rebate for low and middle income earners, which was frozen in 2014, should be restored to 30 per cent of the cost of premiums for under-40s, echoing the calls of insurer peak body Private Healthcare Australia.
He said the age at which the lifetime health cover loading kicked in could be raised to take account of the fact Australians were “staying in university or TAFE longer, starting families later” and struggling with the cost of housing.
The proposal would build on existing reforms that have allowed more than 380,000 young people aged between 18 and 29 to receive discounts of up to 10 per cent on their premiums, he said.
Mr Hunt, who has previously pledged to restore the rebate to 30 per cent once the government achieves a “sustainable surplus”, said he would consider Dr Bartone’s proposed changes “in the context of consultation on further reforms to improve private health insurance”.
Dr Bartone said rising premium costs meant health insurance was “getting further and further out of reach” and young Australians battling to get on the property ladder were opting out.
He said given health funds received taxpayer subsidies, they should return more of their revenue to members.
“There must be a minimum amount returned to the health consumer for every dollar going in,” Dr Bartone said.
“Currently, this varies from anywhere between a high 70 to above 90 per cent. It needs to be standardised, and higher than the industry average right now.”
Dana is health and industrial relations reporter for The Sydney Morning Herald and The Age.