The rising cost of health insurance is pushing more than three million Australians to drop coverage this year, according to a new survey from Finder.
The Finder survey of 1,070 Australians found that 16% of Australians admit they plan to cancel their health insurance policy in 2024.
The main reason for people pulling back from health insurance is cost, with health insurance premiums set to go up by an average 3.03% in April, marking the biggest rise in five years.
Finder is a financial comparison site for a wide range of products and services including health insurance. In Australia it’s website receives more than 4 million visits per month.
More than half the Australian population – about 13.6 million people – have private health insurance according to the Australian Government Department of Health and Aged Care.
Stick or switch
The Finder survey also found that 38% of Australian health insurance customers plan to stick with the same health insurer, while 15% will switch if they find a better deal.
The health insurance sector experienced high profitability last year. Health & Protection reported in August last year that the private health insurance industry in Australia saw its profit after tax more than double to Au$2.2bn (£1.12bn) for the year ending 30 June 2023.
The Finder survey showed that more women (18%) than men (14%) plan to part with their cover.
Young Australians are most likely to abandon their health cover.
The survey found that one in four (25%) of gen Z and 19% of millennials are planning to dump their private health insurance by the end of the year.
Older people still tend to take out insurance at a higher rate than younger Australians.
A total of 40% of the insured population are over 60. Only 6% are aged between 20-39 and 24% are aged 40-59.
Importance of price
A total of 58% of Australians polled told Finder that price was the most important factor when deciding on a health insurance provider.
The cost of health insurance has increased by 204% since 2000, according to the Finder analysis.
That is more than double the rate of inflation over the same period (86%), Finder said.
“A $1,000 per year policy would now cost you $3,038,” it said.
Finder said: “Every provider plans a different increase. Medibank premiums will rise by 3.3%, Bupa’s will go up by 3.61%, HCF has approved a 2.89% increase and NIB customers will get hit with a 4.1% price rise.”
Dr Rachel David, CEO of Private Healthcare Australia said: “The cost of medical and hospital services increased 5.9% this year and there’s been a 9.6% surge in hospital admissions funded by insurers.
“This is putting pressure on premiums.”
Dr David also said premiums were rising due to the government’s ‘Prescribed List’ of generic medical devices.
“We are paying 30-100% more for common medical devices such as insulin pumps compared to people in New Zealand, the United Kingdom, France and South Africa.”