Health cover costs rise as sick subsidise the well

HEALTH fund premiums are being driven up by as much as $1400 a year by the creation of products that exclude cover for things such as childbirth, the Senate has been told.

While consumers think they are saving money by agreeing not to be covered for some things they actually end up paying more.

The reason is that popular products that exclude childbirth are more likely to attract older people past child-bearing age.

Older people are more likely to go to hospital and health funds have to charge higher premiums because these people are a higher risk.

This is driving up premiums for these products by 25-30 per cent — an extra $1400 for families and $700 for singles.

The former chief of the health insurers lobby group and board member of a not- for-profit health fund Russell Schneider said these exclusionary products concentrate high risk people in certain products and force up the cost.

In a submission on the Turnbull Government’s health reforms he says the plan to simplify health fund products into Gold, Silver Bronze and Basic next year will entrench the problem and put top cover beyond the reach of most Australians.

“The most absurd example is the encouragement of older couples to take products which exclude maternity: as a result they are lured into products which comprise more older people who draw heavily without the compensating offset of younger members, and their costs are unnecessarily inflated.”

There are now 40,000 different health insurance products on the market and four in 10 exclude cover for some types of procedures.