According to the Australian Prudential Regulation Authority, more than 100,000 additional Australians had health insurance cover at the end of September compared to three months earlier.
What is extraordinary about that number is that in each of the four previous quarters, the number of people with private hospital cover went backwards.
With each release of quarterly data, there were fresh headlines about the “death spiral” of private health insurance as young people dropped out and there were fewer of them to cross-subsidise the claims of older customers. The industry was said to be in decline.
However, it appears that COVID-19 has revived what was seen as a flagging product.
We might have expected people to tighten their belts and cut their health cover as the jobless rate soared and many people went on federal government income support payments. However, they have done the opposite.
The share prices of the two publicly listed health funds, Medibank and NIB, are often seen as a barometer for the health of the industry.
Medibank’s share price is about the same as it was when the pandemic first hit in March. NIB shares are up about 50 per cent.
Why? In the industry, the theory is that people have become more focused on their health this year and are more concerned about public hospital waiting lists during the pandemic.
Elective surgery was frozen during the lockdowns, extending the queue for some common procedures to more than 100,000 people in NSW alone by June 30, a 20 per cent jump on the same period a year earlier. An update on national hospital waiting lists is due out next week.
If you have private health insurance, you might not have to wait as long.
Australia’s biggest health fund, BUPA, says: “Private hospitals are clearing backlogs much faster, with claims well above 2019 levels for many common procedures.”
Health funds also poured resources into making tele-health work during the pandemic – either via phone or video conferencing. That might partly explain why more people recently took out cover.
The health funds have also suspended premium increases and sometimes suspended them altogether for those suffering COVID-19 financial hardship, to stop them dropping out.
So, how can you have private health cover but also save a few bucks? If you want to have your cake and eat it too, there are three things I would suggest:
- If you are fit and healthy, consider increasing your excess to the new maximum of $1500 for couples/families or $750 for singles. This can shave up to $350 from a family’s annual premium. However, you will need to pay more if you need private hospital admission.
- Reconsider the “extras” part of your cover. This is the dental/optometry/physio portion and you do not need it to access elective surgeries in private hospitals, or to avoid tax slugs, such as the lifetime health cover loading and the Medicare levy surcharge. These are triggered by the hospital part of your policy, not the “extras.”
- Use the new gold, silver, bronze or basic categories to shop around. Sometimes, a similar policy with a different provider is hundreds of dollars cheaper. As a new customer, you can often get up to six weeks of free cover or hundreds of dollars in cashbacks simply by joining.