How Health Insurance Discounts Really Affect Young People

The benefits of taking out private health insurance are obvious. Avoiding hospital waiting lists, staying in private rooms, selecting your own doctor and avoiding the Medicare Levy Surcharge, among others. So why are young people choosing not to take out private healthcare policies?

Consumer group Choice has found that almost three in five young people believe private health insurance is too expensive and poor value for money. According to the Sydney Morning Herald, that’s true for most young people. On average, you won’t start getting more from your health fund than you pay in premiums until you’re 55.

Emergency room

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A possible healthcare solution?

Currently, insurers have to charge the same amount of money for the same cover and cannot discriminate based on age. However, last year federal Health Minister Greg Hunt proposed an overhaul of private health insurance. The federal government is now debating a bill in the Senate to allow private health funds to offer discounts to young people in an effort to encourage them to sign up. A spokesperson for Mr Hunt claimed that the reforms would result in “significant savings” for young people.

The government said discounts could be as much as 10 per cent on hospital cover. When you look closer, however, it’s actually 2 per cent a year for a maximum of five years. In other words, this could mean a reduction of $2.25 a month on some policies.

This proposal has been criticised by Choice’s Katinka Day, who said that, “Discounted private health insurance cover isn’t worth it if you don’t need the cover in the first place.” Rather than to ensure that young people take up health insurance, Ms Day said that insurers want this bill so that more young, healthy people who are less likely to make a claim sign up to private health cover to subsidise costs. This would result in premiums going down for all customers and remain affordable for sick and older members.

So, will the new bill really lower the costs of insurance for young people and help them find more cover than they receive under Medicare? Well, it really depends on the individual policies. As it stands, no one knows for sure what the proposed changes will mean. The bill is currently before the Senate.

Words by Isabelle Laker