Health insurance: The premiums pain is everywhere.
One NIB customer in his seventies has been hit with a combined $100 per week health premiums rise for himself and his wife, proving it’s not only older Southern Cross policyholders experiencing double-digit increases.
The policyholder, who wanted to remain anonymous, said the increase of 10.6 per cent left him questioning how much longer he would be able to keep his cover.
Robert Hennin, chief executive of NIB, which is listed on the ASX sharemarket, said the company was working to keep health insurance affordable for older policyholders.
But increasing claims, and higher medical costs, were behind annual premium rises, Hennin said.
In the past five years claims inflation had been running at around 7-10 per cent, he said.
The septuagenarian originally took out his ‘‘basic hospital no frills’’ policy, with a $2000 claims excess, from Tower.
He became an NIB customer in 2015, when the Australian insurer bought Tower’s book of health insurance business.
Older Southern Cross health insurance policyholders have been complaining about the speed at which their premiums are rising, with some having experienced double-digit premium increases in recent weeks.
The NIB customer wanted the public to know the same thing was happening for policyholders with for-profit insurers such as NIB, and AIA, which last year bought insurer Sovereign.
The premium rises for older health insurance policyholders in New Zealand contrast sharply with the premium rises Australians are experiencing.
NIB’s managing director, Mark Fitzgibbon, announced an average premium rise of 3.38 per cent on its Australian policies, the lowest increase in 16 years.
But in Australia, health insurance is heavily regulated, and premiums are ‘‘communityrated’’, which means everyone (depending on their policy type) pays the same premium for their health insurance, and insurers are prevented from discriminating against members based on health status, age or claims history.
‘‘This contrasts with other types of insurance such as car and life insurance which are risk-rated and influenced by factors such as your driving record, age, etc,’’ health insurer lobby group Private Healthcare Australia says.
Hennin said NIB was working hard to keep costs down through a ‘‘First Choice’’ network of preferred healthcare providers, which has features in common with Southern Cross’ affiliated provider programme.
‘‘We want future premium increases to be as low as possible,’’ Hennin said.
But he said New Zealand might find it worthwhile to look at adopting some aspects of the Australian health insurance market, including the community rating.
Health insurance complemented state healthcare provision, and was increasingly important in keeping Kiwis healthy, and Hennin said the Government should consider policies that could grow the market.
‘‘Take the Australian system, where there is community rating. They (older people) pay the same as a 25-year-old, and I do think that has merit,’’ Hennin said.
Southern Cross, which unlike NIB is a not-for-profit, used to community rate premiums, but in the 1990s private insurers, including Tower, moved into the health insurance market, and typically used five or single-year age bands to calculate premiums, enabling them to offer lower premiums to younger people.
Southern Cross had no choice but to follow.
In a paper to the Society of Actuaries in 2012, Professor Heather McLeod outlined how the resulting premium rises were causing deep dissatisfaction among older policyholders.