In the face of ongoing cost-of-living pressures, Australians wanting to retain their private health insurance (PHI) are downgrading or dropping their cover, new data suggests, however more people appear to be taking up their cover for optical extras and ophthalmic procedures.
Data from the Australian Prudential Regulation Authority (APRA) has shown that while PHI membership and coverage has increased steadily throughout 2024, health fund premium revenue has decreased by $52 million in the first half of 2024. This decrease suggests policy holders are downgrading or dropping their cover as cost-of-living pressures continue to bite.
This is according to Private Healthcare Australia (PHA), the peak body representing 98% of Australia’s private health insurance sector.
At the same time, however, the latest quarterly statistics from June 2024 shows there were almost 43,000 more optical ‘episodes’ compared to the same 2023 period. At 2,762,916, this was a 1.6% increase.
For ophthalmic procedures, such as cataract surgery, episodes increased from 111,942 to 118,078 – or 5.5% – in that timeframe.
PHA has analysed APRA’s data and found more than 216,000 policies were downgraded in the first half of 2024. A total of 14.9 million Australians currently hold some type of health insurance – 55% of the population.
The organisation’s CEO Dr Rachel David said the data showed the impact of Australia’s ongoing cost-of-living pressures.
“In the face of persistent inflation pressure, Australians continue to rely on their private health cover, with health insurance claims expenditure increasing by $2.16 billion – or 9.6% in 2023-24 compared to the previous year,” she said.
“In contrast, revenue from premiums increased by $2.04 billion in 2023-24 – a 7.5% increase compared to the previous financial year.
“The average amount returned to policy holders has also increased during the June 2024 quarter, with funds currently returning 88 cents of every premium dollar to their members. This flies in the face of recent commentary that health funds are sitting on ‘pots of gold’ in profits.”
Dr David said the trend of policies being dropped or downgraded was concerning.
“For 14.9 million Australians, private health insurance is essential, and the smallest increase on their budget – be that an increase in rent or utility costs, can have a profound impact on their access to healthcare, and in turn our health system,” she said.
Dr David said the findings came as the NSW Government threatened to increase a tax on 4 million people with health insurance in NSW to the tune of $490 million. This would add $114 to the cost of an average health insurance policy per person from next year. NSW is the only state in Australia that taxes health insurance.
“The NSW Government should review APRA’s findings closely,” she said. “The smallest increase to consumer costs can have dire, far-reaching consequences that could ultimately impact all residents of NSW seeking timely, affordable and accessible healthcare.”
Download APRA’s quarterly private health insurance performance statistics for June 2024 here.
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