AUSTRALIANS are winding back their health insurance in response to frequent premium increases and changes to government subsidies and surcharges, threatening the balance between the public and private systems.
The dramatic trend, revealed in the first report of a new industry intelligence unit established by the Gillard government, comes as consumers brace for further price hikes as a result of inevitable premium increases in April and the reduced scope of the 30 per cent health insurance rebate.
While the government points to the number of insured Australians as evidence previous policy changes have had little negative impact, and the proportion with hospital cover remains relatively steady, the report shows that the average level of cover has become less comprehensive.
The time-honoured principle of community rating — whereby health funds must not discriminate on the basis of health status — means there is “relatively little substantive difference between insurers on hospital cover”.
As a result, insurers are trying to compete for cash-strapped consumers by offering them policies with large excesses and co-payments or significant exclusions.
Of the 5,130,000 policies in Australia, 2,833,000 have an excess and co-payments while 1,353,000 have exclusions, allowing those members to pay cheaper premiums and generally avoid the Medicare Levy Surcharge that applies to the uninsured.