Why are Aussie’s dumping private health insurance?

Ross Greenwood speaks to Roy Morgan Research director, Norman Morris, about why people are dropping out of private health cover across the nation at the fastest rate in the last five years.

Introduction: Why are Aussie’s dumping private health insurance?

Ross Greenwood: Another big story out today, suggests that people are dropping out of private health insurance at the fastest rate over the past five years. Norman Morris is the Industry Communications Director with Roy Morgan Research who did these numbers. He’s on the line right now. Many thanks for your time, Norman?

Interview with: Norman Morris, Roy Morgan, Research Director

Norman Morris: Not a problem, Ross.

Ross Greenwood:  How many people have dropped out of private health insurance do you estimate?

Norman Morris: 256,000 in the last year. [crosstalk]

Ross Greenwood:  256,000. In that regard, that’s putting pressure on the system because if you’ve got recorded numbers of Australians dumping their private health insurance that means potentially you’ve got less people in the pool and that’s going to put pressure on the premiums to keep rising.

Norman Morris: Particularly if the people who stay are the older ones who are more likely to have problems because it’s too risky leaving. That exacerbates it even further.

Ross Greenwood:  From that point of view if these people are not renewing, when you’ve done your research, what is the reasons why they are not renewing their private health insurance?

Norman Morris: Definitely too expensive but that’s a bit simplistic because what it is, it’s too expensive in relation to what they get for it. Our second reason that’s jumped up is too much out of pocket or Medicare will do me anyway and very much smaller is poor service. Basically, there’s a lot of confusion in this business and gaps and so forth and I think the politicians are applying with the increases too that they probably need to go more. Basically, it’s a quite confused and expensive system.

Ross Greenwood:  The other aspect of this is in regards to those number of people dropping out. If more people are dropping out into the future if the premiums continue to rise, it almost seems to be a circular motion. A little bit of a cyclone coming because the more people that drop out, if they are of the lower risk category, then obviously those people who are staying would end up having to pay more.

Norman Morris: Yes and look, there is a difference between funds mainly the ones that do better. It’s a bit like the superannuation industry funds. The ones that do better, the small and not for profit. The big listed ones which I better not mention, they’ve got a problem to make a profit and keep the customers.

Ross Greenwood:  It’s going to be interesting to watch that one. Norman Morris, the Industry Communications Director at Roy Morgan who did that research. The official numbers tomorrow come out from the regulator of the industry APRA, Australian Prudential Regulatory Authority and those quarterly results will actually show greater detail as to exactly what is happening inside the private health insurance funds that is due to come out tomorrow.

 

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Image source: 2GB

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