Recent data has brought to light a concerning trend within Australia’s healthcare system, with a significant rise in the number of Australians aged 75 to 84 opting to secure private health insurance and hospital coverage for the first time.
The statistics, featured in the Australian Prudential Regulation Authority (APRA) quarterly report and supported by data from the Private Health Insurance Intermediaries Association (PHIIA), reveal a year-on-year increase in hospital cover purchases among this age group.
Private health insurance can be costly for individuals aged 70 or older who are acquiring it for the first time, particularly if they fail to choose a policy that offers adequate coverage for their needs.
In addition to facing more complex health issues requiring comprehensive coverage, older individuals must also contend with the lifetime health cover loading fee (LHCL).
The LHCL is imposed on all Australians at a rate of 2 percent per year for each year without private health insurance starting from the age of 31.
While it is possible to purchase health insurance directly from insurers, it is essential to select a policy tailored to individual circumstances.
Consulting a health insurance expert is recommended to navigate the variety of insurers and policies available to obtain the best value.
The right coverage can help older Australians avoid the extended waiting lists in the public healthcare system, subject to a 12-month waiting period.
The increasing interest in private health insurance among older Australians can be attributed to prolonged elective surgery wait times in the public system, which have remained high post-COVID.
The Australian Medical Association (AMA) estimates that the waiting list for individuals requiring public elective surgery is approximately half a million, with an additional estimated 400,000 on the “hidden waiting list” awaiting outpatient consultations before scheduling surgery.
The median waiting time for hip replacement surgery in the public system currently stands at 293 days, while cataract surgery involves a 158-day wait.
In the 2020-21 period, the Australian Institute of Health and Welfare reported that roughly 40 percent of all elective surgeries performed in Australia, including hip and knee replacements, were performed on patients aged 65 and over.
Despite comprising just over 15 percent of the population, this age group accounted for over 40 percent of day and overnight hospital admissions.
Year-on-year figures from the Private Health Insurance Intermediaries Association (PHIIA) indicate an increase in older Australians obtaining private health coverage:
- 50-54-year-olds saw an increase of 8.3 percent.
- 55-59 year-olds saw an increase of 6.1 per cent.
- 60-64-year-olds saw an increase of 8.5 percent.
- 65-69-year-olds saw an increase of 9.5 percent.
- 70-74-year-olds saw an increase of 11.2 percent.
- 75-79-year-olds saw an increase of 26.1 percent.
- 80-84-year-olds saw an increase of 8.7 percent.
- Those aged 85 and older remained unchanged.
Kate Browne, head of research at Compare Club, a leading health insurance comparison website in Australia, advised caution to older Australians considering private health insurance options.
She emphasized the need for hospital cover that includes procedures likely to be required as individuals age.
Basic, Bronze, and many Silver policies often do not provide sufficient coverage, leading to unexpected out-of-pocket expenses.
For younger Australians, Compare Club stressed the importance of taking out health insurance before turning 31 to avoid costly lifetime health cover loading fees.
This proactive approach ensures comprehensive coverage for potential health challenges in later years, as well as savings on insurance costs.
One challenge in the health insurance landscape is the need for greater transparency in policy options. Many insurers prominently display low policy rates, with the actual costs, including LHC loading, only revealed in the final stages of the purchasing process.
This lack of clarity can mislead customers regarding the true cost of their coverage.
In conclusion, obtaining private health insurance early in life is key to avoiding the financial burden of increasing LHC loading fees as individuals age.
Compare Club remains committed to assisting individuals in making informed decisions regarding their health insurance, thus securing a healthier future.
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