Health insurance reforms target the young

By Rachel Tassicker and Simon Orchard


Students have been warned new private health insurance reforms aren’t all they’re cracked up to be, by a Curtin University professor.

The Federal Government announced financial incentives for young people to buy health cover on Friday.

Associate Professor in Health Economics in the School of Public Health, Richard Norman, said Friday’s announcement would have a marginal affect in terms of attracting and encouraging young people to take out private health insurance.

“We live in a country where everything is expensive, housing, transport etc, and you have so many competing demands on a limited budget, it means health insurance is way down the list,” he said.

Associate Professor Richard Norman in his office at Curtin University.

“Most young people ignore health insurance until they hit an age where they think they would need care.

“As an economist we talk about carrots and sticks, and attracting young people to health insurance has been traditionally difficult because relative to the rest of the population, they are bulletproof, and their perception is even more so.”

Federal Health Minister Greg Hunt said the changes were necessary in order to reduce rising costs for health insurers, as well as offer incentives for new customers entering the market.

“We are encouraging younger Australians to take up private health insurance by allowing insurers to discount hospital insurance premiums for 18 to 29 year olds by up to 10 per cent,” he said.

“The discount will phase out after people turn 40.

“People with hospital insurance that does not offer full cover for mental health treatment will be able to upgrade their cover and access mental health services without a waiting period on a once-off basis.”

This would significantly enhance the value of private health insurance for young people, he said.

HBF are set to benefit from today’s government reforms.

HBF chief executive, John Van Der Wielen, welcomed the reforms, saying the measures would help relieve pressure on members’ premiums.

Mr Van Der Wielen applauded the move to incentivise younger Australians to take out private hospital cover through a discount on their premium.

“The community rating model that underpins Australia’s health insurance depends on attracting younger members,” he said.

“This is a realistic response to the challenge, of getting young people to protect themselves against costly health bills.”

But Mr Van Der Wielen also said the measures should be regarded as “initial steps only” towards addressing affordability concerns and there was still more to do.

“This is only phase one and we need to keep the reform going across all areas of the health system because Australia does have a good health system and its about keeping it good rather than seeing it deteriorate,” he said.

Mr Norman suggested there were several benefits associated with private health care, including reduced waiting time to see specialists, more choice about who you saw and the type of care you received.


What this means for students:

  • Young people offered cheaper premiumsThe reforms will make health care policies cheaper for young Australians by introducing a premium discount worth two per cent per year for each year they belong to a health fund before they turn 30, to a maximum of 10 per cent. This will be phased out by the time they turn 40.
  • More clarity about private health categories

Private health policies can be confusing, but from 2017-18 on, policies will be classified as Gold, Silver, Bronze or Basic, and each of these will have to meet certain coverage standards.

Students at Curtin University with their public and private health cards.

  • Helping you choose

Choosing the best policy can be a difficult decision, especially for younger people who aren’t exactly sure what they want. Sites like ‘Compare the Market’ claim to make the choice easier, but as they get commissions from health funds, they might not always show the best options.

As part of today’s changes, the website is being upgraded to suggest the most helpful and suitable health fund.

  • Improved mental health cover

Many policies choose not to cover mental health services, however under the new reforms, even basic policies will be covered. Consumers who already have a policy will also be allowed to upgrade their cover to access in-hospital mental health services without a waiting period.

Policy holders will also be allowed unlimited access to these services.

  • Premium price rises will decrease

For those who already have cover, gradual increases over the last couple of years have been around five to six per cent. Today’s announcement should see this decrease to three per cent.