Indeed, the ABC’s recent Vote Compass survey identified health as the number three worry after climate change and saving for retirement. So why are so many turning their back on private health insurance?
" Affordability of private health insurance is an issue for many. And demand for private health insurance is price elastic."
There is no one reason but increased out-of-pocket expenses are a key factor linked to consumer dissatisfaction with - and exits from - private health insurance.
Affordability of private health insurance is an issue for many. And demand for private health insurance is price elastic. That means when prices increase, demand decreases.
Higher premiums are linked to consumer dissatisfaction and exits from private health insurance. This is especially the case with younger policyholders who use their insurance less if at all.
Although the growth rate of private health insurance premiums has slowed, it has long outpaced that of wages and contributed to consumer concerns around affordability.
Over recent years a declining proportion of the population has enrolled in private health insurance. More noteworthy though is how a majority have ‘traded down’ - that is, switched out of higher premium policies with wider coverage into exclusionary policies (lower premium policies with narrower scope of coverage).
The trading down trend in hospital cover is significant: six in 10 individuals with hospital cover now have exclusionary policies compared to just one in 10 a decade ago.