"What they're offering is poor value"

"What they're offering is poor value" | Insurance Business

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When the Australian Prudential Regulation Authority (APRA) released its quarterly statistics on private health insurance memberships in May, it highlighted a steep drop in customers.

Read more: APRA releases private healthcare statistics for the March quarter

According to Dean Price, a health campaigner at consumer association CHOICE, the findings are telling of consumers’ attitudes towards the industry.

“The APRA statistics are further proof that Australians are giving up their health insurance in droves,” Price said. “This is yet another quarter in which fewer people have seen value in taking up private health insurance.”

Price says Australians, especially young people, are “voting with their feet” with a drop in 10,000 private health insurance customers in the quarter. He says consumers think what is being offered is of poor value.

The data APRA released covered, primarily, the period before the COVID-19 pandemic took its grip, something that Price says emphasises private health insurance’s lack of value.

“It’s interesting to know that this data is only up until the end of March, so only a small part of this period was actually the period where we saw services being shut down and elective surgery being cancelled… Our research found people still find private health insurance too expensive,” he said.

According to Price, 78% of people with private health insurance rated it as one of their most expensive living concerns, and they continue to see the sector doing little to address this.

“When you’re sick you just want to be cared for, but private health is still riddled with confusing policies, manipulative marketing, poor value and the nasty surprise of exorbitant out of pocket costs,” Price continued.

“What we saw in the data APRA released was that out of pocket costs have increased over the past 12-months. They’ve increased hospital costs by 2.5% and then increased extras cost by 6.2%.”

Another concern Price raised was over ‘exploitative’ marketing techniques used during the pandemic to reel in consumers.

“At the start of COVID, there were particular insurers who started to prey on people’s fears around private health insurance and shortages of things like toilet paper,” Price explained. “They were selling their private health insurance at that point in time and pushing it as a way of getting treatment and coverage for COVID.”

Read next: How to build a pandemic-proof insurance company

But Price says this was misleading, as the main driver in the response to the pandemic “was actually our public health system” and not the private health insurance sector.

To address the alleged lack of value being delivered to consumers, especially young people, and the ‘misleading’ advertising, Price says the government must review the entire sector through a “thorough” public inquiry.

“What we’re seeing is the policy for private health insurance hasn’t been thoroughly assessed since the changes that were made by the Howard government in the late 90s,” he continued. “And what we’re wanting to see is some thorough review of the settings that are in place and the changes that have been made since that time, since the production committee last looked at the private health insurance industry to make sure that policies are actually delivering on what their goals are.”

Price claims the private health insurance industry doesn’t have a “set policy agenda”, which causes confusion over what support it delivers outside of the public health system, or if it’s only meant to deliver extra services outside of it.

“All of these things need to be sorted out, it needs to be done systematically, it needs to also assess whether the confusion that people see, the increases in costs that people see can be addressed in a better way,” he said.