This article is more than 2 years old

This article is more than 2 years old

More than three-quarters of Australians are struggling to afford their private health insurance, new figures show.

The data, released by the consumer group Choice, shows that 77% of those with private health insurance are struggling to meet the cost of their policies. Private health insurance was listed the second greatest concern in terms of cost-of-living expenses, behind electricity.

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“It’s a staggering number, it’s right up there with the cost of electricity,” said a Choice spokesman, Tom Godfrey. “But I think it just reflects the pressure people are feeling. A lot of people do want private health insurance, but the sad fact is that it’s just becoming unaffordable.”

Choice’s figures are based on a survey of 1,029 Australian households and fieldwork.

Past figures released by Choice show about 70% of those without health insurance have cited cost as a factor in their decision to stay out of the market.

The federal government introduced reforms to parliament on Wednesday in an attempt to address concerns about the private health insurance system.

The reforms would include allowing discounts for hospital coverage for people under 30, increasing the strength of the health insurance ombudsman and letting private health insurers cover travel and accommodation costs for rural and regional Australians attending health services.

The legislation would also allow private health insurance providers to increase customer excesses in exchange for lowering premiums for the first time since 2001. The increased excess would be $750 for singles or $1,500 for couples and families.

Private health costs are expected to increase from April. The average price rise is expected to be 3.95%, although Choice says that for some policies the increases will be higher.

On Thursday the Australian reported that premiums would increase further owing to a significant misinterpretation of insurance rules by some providers. The report said 12 insurers were still offering policies with non-compliant benefit restrictions, and had been ordered to remove them from the market by July. The changes would improve cover but contribute to higher premiums.

The proportion of Australians with private health insurance is well below levels seen in 1975. It fell from 54% in 1984, when Medicare was introduced, to 33% in 1997. But the Medicare levy surcharge and private health insurance rebate has seen the proportion rise back to 46%.

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Godfrey said Australians appeared to be at a tipping point in their view of private health insurance. “We’re seeing people dropping out of the private system, and our research has shown that that is because it’s too expensive,” he said.

“What the insurers need to do is look really, really hard at the policies they’re offering, and demonstrate that there is value staying in the private system.”

He said transparency was vital. Insurers needed to be more upfront with the contents of their insurance policies, give average prices, and stop offering so-called “junk” policies. They needed to better explain the level of cover offered in their policies, to reduce confusion for consumers.

The federal health minister, Greg Hunt, said the government’s changes would address concerns about affordability and transparency.

“These reforms will therefore help strengthen the viability of the private health system by addressing concerns about affordability, complexity and lack of transparency of private health insurance,” Hunt said.

