Like a lot of young people, my first job was in retail, in the sort of place that was mostly about discounts – cheap CDs, speakers and two-for-one DVDs. Younger Australians, in my experience, are fairly value-conscious thanks to our constant low-level awareness of just how high house prices are compared with our wage growth.



But I knew almost nothing about private health insurance until earlier this year, when I reported on a survey that showed how bad a deal it was for people like me.

On Friday, the government announced an extensive private health insurance overhaul, aimed at persuading people my age (23) to sign up, with yearly 2% discounts on premiums for those under 30 – capped at 10%.

If anything, it has convinced me to do the opposite.

Earlier this year, my mother and I decided to allow my private health insurance to lapse. The costs, on anyone’s calculation, are terrible. The industry feels dysfunctional and slightly rotten – with complaints to the ombudsman rising by 24% in 2015.

Statistically, health insurance is a bad deal for any young person, who will on average spend more than they get back and rely on the public system more often than not. In many ways, that is the how the system is meant to work.



For the young consumer, the maths don’t add up. A discount of between 2% and 10% is not enticing for a package that a young person will probably never use, in an industry where 13% of policies were classed as “junk” for not covering heart attack or cancer.



Even for those over 30, there is still no reasonable incentive, according to the consumer group Choice.

For every year that someone over 30 goes without insurance, the government adds a 2% loading to their premium, to a maximum of 70%. But Choice’s analysis showed that someone could wait until 45 to take insurance, while copping a 30% loading, and still save $9,000 compared with taking low-quality insurance at 30.

For someone my age, a single health insurance policy will cost around $800 a year. On that basis, the discount if I signed up now would be $16 in the first year, rising to $80.

By buying insurance they infrequently use, young people foot the bill for older generations

It is a middling, pointless incentive. For those simply buying for peace of mind, the cost is frequently unbearable, the discount negligible and the product is an odd bundle of non-ideal features.



I am lucky enough to have no outstanding health conditions that would require private insurance. My current plan is a basic version, with dental and optical (which I do not need) but no hospital cover. If a medical condition arose unexpectedly, it would probably be of little use. The plan at the moment is to pay out of pocket for what I need, and look at insurance again if my health situation changes.

According to Jennifer Doggett, a fellow for the Centre for Policy Development, the government should not be trying to convince young people to buy insurance, but to find other ways to fund healthcare.

“The question is not how we should shoehorn or bribe or coerce young people into private health,” she tells me. “Statistically, it’s a bad deal even for older, middle aged people, in some cases up until 65.

“The question should be what is the best way to fund our growing healthcare bill. Private health insurance is not that efficient. Tax is more efficient. It is entirely possible to fund a private health system without private health insurance.”

She says many purchases of private insurance are driven by misconceptions.

“The problem is that often young people have not had much contact with the health system, their knowledge of what is available on our public system is low. Governments and health funds play on that and create a system of fear – that it’s part of becoming an adult, like moving out of home and getting a driver’s licence.

“The quality of care in the public system is just as good if not better, from all the evidence we have. People have this false idea of private health insurance, you take it out and everything is taken care of.”

With this push to sign up the young, there is an all-too-familiar generational bind at play. By buying insurance they infrequently use, young people foot the bill for older generations – pooling the risk and cost of healthcare.

This would be fine if young people had the same financial prospects that previous generations did. But in other sectors, young people are struggling to afford housing, while generations above them sit on rising property prices. Wage growth is stagnant and insecure work disproportionately affects younger Australians.

Wealth is heavily concentrated among older generations, making any plan to prop up healthcare through the spending of the young flawed.

It is hard see how anybody my age without a pre-existing medical condition is going to be convinced by a minor change in policy. The government’s initiative is still fundamentally a bad deal, and one that many young Australians will reject.