Health fund costs alienate members

THE proportion of the population in a health fund has fallen for the first time in 15 years as premium rises three times the inflation rate threaten to fatally wound the industry.

IPSOS research obtained by News Corp shows if no action is taken to control premium rises, 20 per cent of fund members will downgrade or drop their cover within six years.

Health funds say Health Minister Sussan Ley could save the day and cut premiums by between $150 and $300 a year if she changes to the way the government sets the price for prostheses like hip and knee replacements. They say such changes could save funds about $1 billion a year.

However, health fund spokeswoman Private Healthcare Australia chief Rachel David says the minister needs to change the pricing system in the next eight weeks to impact on next year’s premium rise.

“Premium applications for next year have to be in by November 1, so really by the end of the year we need to see some movement,” she says.

Government figures show health fund membership has declined from a peak of 47.4 per cent of the population in June last year to 47 per cent in June this year, when the total of people covered fell by 2958, the first drop in 15 years.

Data from health insurance broker i Select shows there has been a drop-off in the number of under-40s joining health funds in the past 12 months. These people are likely to make fewer claims and help keep premiums down.

Market researcher IPSOS interviews 5000 people annu- ally about their attitudes to health and provides the results in confidential briefings to industry players.

News Corp has obtained its 2015 report, which contains dire warnings about the future of private health insurance.

“We know with the (27 per cent health insurance tax) rebate now means-tested and indexed to CPI, we will hit an ‘affordability cliff’ in six years, with one-fifth of consumers significantly downgrading or dropping hospital cover,” IPSOS says.

Products that exclude treat- ments such as obstetrics or hip replacements to cut cost have grown from 1 per cent to 30 per cent over 20 years, and 80 per cent of policies now have an excess or exclusions, up from 20 per cent 20 years ago.

“This is putting the viability of the private health sector, which underpins accessibility of non-emergency surgery in Australia, under threat,” it says.

IPSOS also warns that as state governments build newer public hospitals, people are no longer differentiating between private and public hospitals based on quality.