Why Young People Aren’t Getting Into Private Health Funds

YOUNG people are refusing to join a health fund in a move that will push up premiums not just for themselves but for all Australians.
The number of young people enquiring about taking out health insurance in 2016 has plunged nearly 20 per cent compared to 2015 says health fund broker iselect.
Fewer young people in health funds means the pool of people in private health insurance gets older, older people have more expensive health costs and this pushes up premiums which are already rising three times the inflation rate.
It comes as government data shows the proportion of the population with health cover has fallen for the first time in years from 47.4 per cent to 47.2 per cent.
The drop follows years of premiums rises well over the inflation rate, a public spat between major hospitals and insurers and an aggressive campaign against insurers by the Australian Medical Association.
Government policy encourages Australians aged over 30 to join a health fund by imposing an extra two per cent a year penalty premium every year they delay joining a fund after this age.
Those who delay joining until they are 31 will pay premiums two per cent higher than other Australians, if they wait until they are 40 to join a fund they will have to pay 20 per cent more.
The government sent letters to more than 270,000 young people in May warning them they faced higher premiums if they put off joining a health fund later in life. However, iselect says many young people appear to have ignored the letters.

“There has been quite a bit of negativity in the media over the past year regarding private health insurance that could be contributing to younger people simply not bothering to look into their options before June 30,” iselect spokeswoman Laura Crowden said.
“Every year we see an influx of people at the last minute but it looks like this year younger customers are leaving it later than ever. It could be that the Federal Election and Brexit are simply distracting young people from the deadline.”
Its important that young Australians are fully aware of the implications of not taking out private health insurance by the 1st July following their 31st birthday because LHC compounds, Ms Crowden said.
“The longer a customer waits to take out private cover, the more it will cost them and may end up making private cover simply unaffordable later in life,” she said.
Private Health Care Australia which represents the major health funds has confirmed a drop off in new memberships among young people.
“I don’t have any hard data but anecdotally I’m hearing from the funds about a similar dynamic,” Private Health care Australia chief Rachel David said.
One consequence of the drop in younger members could be higher premiums for all other members of health funds.
Young people are less likely to make a claim on their hospital insurance than older Australians and their premiums help cushion the high cost of health care of the elderly in health funds.
A young person who waits until they are 32 to join a health fund will pay $17 a year extra for a basic health fund policy.
If they wait until age 40 they will be paying $153 a year in penalty premiums for a basic health fund policy.


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