Crunch time for health insurance
Ageing baby boomers are struggling to pay skyrocketing health insurance premiums. Rob Stock reports.
The average health insurance policyholder now pays $2210 a year for their cover, but for ageing baby boomers the average cost is $3765. People buy health insurance to avoid having to wait for treatment in public hospitals, but the price rises as people get older, and are more likely to make claims for things like hip, knee and eye operations.
But Canstar says baby boomers, who were born between 1946 and 1964, are feeling the pinch as a combination of increasing claims and medical inflation is driving up premiums.
‘‘There is no doubt that baby boomers are feeling the pinch when it comes to the rising cost of health insurance,’’ said Canstar general manager Jose George.
‘‘Although an overwhelming majority of our older generation liked the peace of mind health insurance provides, unfortunately two in five of them will sacrifice spending in other areas in order to be able to pay their premiums.
There’s a crunch point where health insurance premiums seem to breach policyholders’ comfort limit.
‘‘As the average cost of health insurance reaches $2210 per year, over half of people think it is becoming too expensive.’’
Premiums were now so high that 32 per cent of baby boomers had reduced their cover to keep the costs of premiums down, and 45 per cent had restricted cover because broader cover was too expensive.
‘‘At first glance, our older generation is paying more in terms of premiums despite making a similar number of claims as the younger age groups per year,’’ George said.
‘‘However, the claims they make are three times more likely to be for serious illness.’’
As people age, they find it gets harder to shift between insurers, who will generally exclude cover for pre-existing conditions.
‘‘This may also explain why baby boomers are three times more likely to stay with their insurer due to pre-existing conditions,’’ George said.
The not-for-profit insurer Southern Cross is the largest health insurer with over 800,000 policyholders. It is owned by its policyholders, unlike many of the other health insurers which are owned by profit-seeking shareholders.
Southern Cross has been trying to stem the rising cost of health services by locking private