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3 problems Australia's private health insurance sector must solve

20 November 2017 - 4:51pm

Over 13.5 million Australians have some form of private health insurance, Australian Prudential Regulation Authority (APRA) data shows. That's well over half the population, a coverage level far better than many other advanced nations like New Zealand, the UK and Ireland. 

While Australia's health insurance coverage is impressive, there are still several countries ahead of us. France, Belgium and the Netherlands, for example, have private health insurance coverage levels exceeding 80 per cent, according to OECD data. Part of the reason we're behind is that there are a number of problems with Australia's private health insurance sector.


Will the government's reform of private health insurance work? Will the government's reform of private health insurance work?

1. Private health insurance premium affordability

Private health insurance premium increases have ranged between 4 and 6 per cent a year for the last 10 years, Actuaries Institute analysis shows. Despite that fact, 84 per cent of Australians believe they get great value from their health insurance, according to a Private Healthcare Australia survey. 

This indicates that the main issue with premium increases and affordability is not that it pushes people to drop their insurance, but rather that it keeps the uninsured from taking out cover.

Despite promising signs the question remains - will the government reform work?

The Australian government's private health reform is starting to address this with several measures such as the review of the prosthesis list, discounts for young people without cover and increases of excess caps. 

These aim to slow increases, and help make sure private health insurance is as affordable as possible. 

2. Out of pocket costs for procedures

Out of pocket costs occur when your health insurance policy does not cover the full cost of your treatment, and you have to top the payment up with your own funds. One in seven medical procedures incur out of pocket costs, according to the Department of Health.

Patients that are faced with these obviously tend to doubt the value of their private health insurance. Luckily the industry and the government are moving to solve this problem, by forming a committee to review the issue and find a solution. 


Out of pocket costs are one of the most pressing problems for the Australian private health insurance sector.Out of pocket costs are one of the most pressing problems for the Australian private health insurance sector.

3. The complexity of the private health insurance system

To the average person gaining a solid understanding of private health insurance is near impossible. There's rebates, discounts, accruing price increases after a certain age, and not to mention the variance in cover from policy to policy. The governments' classification of insurance policies into gold, silver and bronze categories may help to simplify the choices consumers face to some level. 

Despite promising signs the question remains - will the government reform work? Those measures described above represent a step in the right direction. However, the industry and the government itself still have considerable work to do to make private health insurance, affordable, simple and valuable to every day Australians. 

To discover the value of a personalised private health insurance plan, or learn more about your options, get in touch with HICA today.