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Consumer advocacy group Choice has urged the federal government to scrap its plan to allow health insurance companies to offer discounts to people aged 18 to 29, arguing the move will lead to health funds luring young adults into buying low-value junk policies.
Under the Turnbull government’s proposed overhaul of private health insurance announced last year, health funds will be allowed to give discounts of up to 10% on hospital cover to people aged 18 to 29 to make premiums more affordable.
“While the cost of private health insurance is one of the top concerns that needs to be addressed, cost cannot be looked at in isolation,” Choice’s Katinka Day told The Sydney Morning Herald. “Discounted private health insurance cover isn’t worth it if you don’t need the cover in the first place.”
The consumer group will present its view on the government’s Private Health Insurance Legislation Amendment Bill at a Senate committee hearing on Tuesday in Canberra. The bill, which is still being debated in the Senate, doesn’t give specifics on how the age-based discounts will work, but it appears health funds will be able to offer 2% a year discounts for five years maximum, with the discount to be phased out when the policyholder reaches 40, SMH reported.
Day said the age-based discount is unlikely to improve health insurance take-up among young Australians.
“If existing incentives for young people to take up [insurance] are not proving to be successful, an age-based premium discount for hospital is likely to be no different,” Day said.
Private Healthcare Australia (PHA) said its research found a “pent-up” demand for health insurance among those under 30, and that the discount would make the cover more accessible to young Australians. A separate analysis also showed that the discounts would attract an additional 300,000 people aged 25 to 29 into the system.
“It is completely untrue to suggest people in this age group do not benefit from insurance,” PHA CEO Rachel David told SMH. “The most frequent claims are for the treatment of accidents and sporting injuries in men – where there can be a considerable delay in getting treatment in the public system – an issue if you need to get to work.”
