There has been a 30 per cent increase in complaints to the Private Health Insurance Ombudsman, the ACCC says. Picture: iStock
There has been a 30 per cent increase in complaints to the Private Health Insurance Ombudsman, the ACCC says. Picture: iStock

Why Aussies are shunning health insurance

AUSTRALIANS are becoming increasingly dissatisfied with private health insurance - and some are turning their backs on their cover altogether.

That's the damming findings of the Australian Competition and Consumer Commission's (ACCC) latest report, which revealed an increase in complaints regarding out-of-pocket costs and unnecessarily complicated policies.

As a result of its findings, the ACCC is calling for greater transparency about product features and changes to policies.

The ACCC found rising premiums were a growing concern, and that some consumers were coping by either switching to cheaper policies with less cover or higher excesses, or even dropping their cover completely.

"We've found it's currently very difficult for consumers to properly compare and choose policies for their needs, meaning many are shocked when presented with expensive bills for medical services and products they thought they were covered for," ACCC acting chair Delia Rickard said.

"Consumers are increasingly questioning whether the benefits of private health insurance offset the premium increases - a trend that should concern the industry.

"We believe private health insurers are capable of providing consumers with significantly more detail about extent of coverage under their policies. Clear and prominent disclosures are one measure that can rebuild waning trust in an industry where complaints increased by 30 per cent last financial year."

The body is also calling for reforms to the sector to make insurance easier - and cheaper.

According to the ACCC, Australians paid around $23.1 billion in health insurance premiums between 2016-17.

That was a $1 billion increase from the previous 12-month period, while premium increases have been greater than inflation and wage growth for several years.

In June 2017, 54.9 per cent of the population had hospital or general health insurance cover.

That was a 0.6 per cent decrease from June 2016.

There was a two per cent increase in hospital policies with exclusions in 2017 compared with 2016, while complaints to the Private Health Insurance Ombudsman have increased by 30 per cent.

Meanwhile, 31-year-olds who are considering taking out private health insurance now have just five days left if they want to dodge the Lifetime Health Cover (LHC) Loading deadline of July 1.

If you're confused by what that actually means, you're in good company. A recent survey by comparison site revealed 73 per cent of Gen Ys, or around 3.9 million Aussies, don't understand what the Lifetime Health Cover Loading actually is, while more than three in five people in the wider population are unclear.

For the uninitiated, the loading comes into effect on July 1 after you turn 31, and adds two per cent to your eventual premium if you do not have hospital cover.

It means that if you were to finally take out insurance at age 45, you will end up paying 30 per cent more.'s insurance expert Bessie Hassan said Australia's approximately 370,000 31-year-olds needed to make a decision as soon as possible.

"The Lifetime Health Cover Loading can add up to 70 per cent on top of a person's health insurance premium, which could end up being thousands of dollars for some, depending on when the cover is taken out," she said.

"Not only do the majority of Australians not understand what the Lifetime Health Cover Loading is, but they could actually be paying for it without realising."

Ms Hassan also warned young Australians not to be lured in by tempting health fund incentives.

"At this time of year there is a plethora of health insurance deals available to entice new members," she said.

"Some health funds are offering six weeks free if you sign up in June, while others are rewarding new members with cash cards.

"It's important to remember that health insurance can be a big expense. A voucher may seem enticing but it might not be worth it in the long run."

Who’s really paying the Lifetime Health Cover loading? Picture:
Who’s really paying the Lifetime Health Cover loading? Picture:

New research from has also found 71 per cent of Australians who are paying the Lifetime Health Cover would like health cover to be risk-rated, which means people with existing health issues would pay more for private cover.

The idea behind the loading is to encourage Australians to take out insurance earlier in life, in order to protect unwell people from being slugged with higher premiums.

But according to the research, most young Australians aren't convinced, with 80 per cent of 18 to 34-year-olds believing they should pay less because they were healthier, even though that may mean those in poor health would have to pay more. Tellingly, less than half of over-65s shared that view.

Household savings and health insurance expert at, Abigail Koch, said community-rated health insurance, which means everyone pays the same base premium no matter their age or health status, helps subsidise the cost of private care for older Australians, and those with pre-existing conditions and ongoing health problems.

"The LHC loading enables health funds to support the principles of community rating, by keeping health insurance policies more affordable for all Australians," she said.

"However, our results show that the majority of policyholders would still prefer to see their insurance costs come down even if it meant that others with greater health needs would have to pay more.

"There is a need for both the government and health funds to do more to educate Australians about Lifetime Health Cover and how it can affect the premiums you pay later in life."