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Medibank private wants to give younger Australians compelling hip-pocket reasons for signing up to private health insurance.
THE largest and most profitable health insurer wants to hit people as young as 26 with a decade-long penalty for not taking out private cover.
But fund members want the opposite — a chance for anyone who doesn’t hold a policy to be able to join the system without paying Lifetime Health Cover loading, which adds as much as 70 per cent to premiums.
Nearly two-thirds of 45,000 policyholders surveyed as part of the Big Health Insurance Switch say they support a Lifetime Health Cover loading amnesty. Less than seven per cent are against a moratorium. The rest are unsure.
Medibank Private, however, is in no doubt. The $8 billion insurance giant has told the Federal Government to apply the loading to those as young as 26.
It bills the proposal as an “affordability†solution.
Sydneysiders Richard Spencer and Joanna Mitchell (both 29) have private cover but are wondering whether to keep it. ‘The system is confusing,’ Spencer said. ‘And we don’t use it as much as we should. Once you’re in they’ve got you.’Source:News Corp Australia
However, if Medibank got its way, a person who joined at 30 would pay a 10 per cent penalty for 10 years.
At the moment, a 30 year old who takes out hospital cover pays no loading.
“Reducing the starting age for Lifetime Health Cover loadings from 30 to 25 would encourage consumers aged 25-29 to participate in private health insurance,†Medibank argues in a submission to the Government’s private health insurance review.
As things stand, it is not until 31 that people are hit with a two per cent premium penalty for every year they delay. At 40, it is 20 per cent. The maximum loading is 70 per cent. The penalty is payable for 10 years.
The Medibank proposal would bring the starting age down to 26.
Like policyholders, comparison services want an amnesty.
“We’ve got to get more people†in private cover, said Private Health Insurance Intermediaries Association CEO David Wright.
PHIIA represents the likes of iSelect and Compare the Market.
Leading consumer advocate Christopher Zinn said it is a “scandal†a moratorium hasn’t been raised.
EARLIER: Aussies dropping cover to save money
Consumer advocate Christopher Zinn has been fiercely critical of the private health insurance industry.Source:News Limited
In 1999, when the Howard government announced it would bring in the loading, there was a 40 per cent surge in fund membership as people raced to get in before the penalty took effect. That’s equal to the entire increase since then. Loading is now payable on one in seven policies covering nearly 1.2 million people. The average loading payable is 24 per cent.
Second-ranked Bupa and no. 4 NIB also want to bring younger people into the system. But under their proposals, those who joined between age 25 and 30 would get a discount. The insurers’ lobby Private Healthcare Australia supports this concept.
Health minister Sussan Ley said the loading was not a problem for consumers. She appears open to the idea of an increase in the loading, but not an amnesty.
It is “up to insurers to make the case regarding the benefits to consumers of any change as part of any broader reform packageâ€, she said.
Health Minister Sussan Ley does not favour an amnesty. Picture: Lawrence PinderSource:News Corp Australia
Opposition health spokeswoman Catherine King said Labor would look at proposals that came from the government’s review.
Nearly 70,000 people have joined the Big Health Insurance Switch in pursuit of more affordable cover. The campaign began a fortnight ago and aims to use “people power†to extract a group discount from a major health insurer.
To join the Big Health Insurance Switch go to www.onebigswitch.com.au
* There is no obligation to take up any offer. This masthead’s publisher News Corp Australia and One Big Switch will earn a commission from any accepted deals. News Corp Australia is a shareholder of One Big Switch.