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Private health insurance (PHI) is in trouble, because premiums are too high and are perceived as not representing value to younger Australians. Pre-COVID, from June 2015 to June 2020, PHI membership fell for 20 successive quarters.

The main driver is that people are waiting until they get older to take up PHI just before they need it the most, and then utilise it heavily in old age. Without a diverse insurance pool (which all insurance relies upon) that includes younger Australians, there is upwards and unsustainable pressure on premiums.

The policy settings to support private health insurance in Australia are not set and forget. Demographics, wages, chronic disease, technology and healthcare all change, and we need to respond to these changes to ensure Australia’s private health system remains stable.

To stem the exodus of PHI policy holders, we need to increase the value and decrease the pressure on premiums, at the same time. Careful reform will be required both in the short and long term.

Utilising publicly available data, the AMA has undertaken original modelling to develop a list of policy proposals to improve the health of the system.

Each proposal has one of two ultimate goals – to either make private health insurance more affordable for those who currently cannot afford it, or to improve its value proposition for consumers, and the wider health system.

Details

1. Explain key components of the report
2. List main recommendations
3. Recognise the benefits as a result of implementing the recommendations.