Health insurance dilemma for boomers
The average health insurance policy holder 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 policyholders age and are more likely to make claims for the likes of hip, knee and eye operations.
But Canstar says baby boomers ( those born between 1946 and 1964) who have opted to buy health insurance are feeling the pinch as a combination of increasing claims and medical inflation drives premiums up.
‘‘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,’’ George said.
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,’’ George said.
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 preexisting conditions,’’ George said.
The not-for-profit insurer Southern Cross is the largest health insurer with more than 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 healthcare providers into agreed-price contracts through its ‘‘affiliated provider’’ programme.
For the second year running Canstar named Southern Cross Healthcare best for overall customer satisfaction.
Nib, Sovereign and UniMed ranked joint second.
Medical insurance policies can be hard to read and understand. Southern Cross and UniMed were judged by customers to have the clearest policies, Canstar said.
Canstar polling revealed: Almost two-thirds of Kiwis with health insurance (62 per cent) liked the peace of mind it gave them.
This attitude was more prevalent in women (70 per cent) than men (58 per cent).
As people age, they valued that peace of mind more highly, 77 per cent for baby boomers, and 53 per cent of Gen Y.