• Home
  • Media
  • New health insurance data points to concerning trend for older Australians

New health insurance data points to concerning trend for older Australians

Updated 30/10/2023
New health insurance data points to concerning trend for older Australians

New data highlights a concerning new trend in Australia’s health system as it reveals a significant increase in the number of older Australians aged 75 to 84 who are opting to secure private health insurance and hospital cover for the first time. 

The statistics, published in the Australian Prudential Regulation Authority (APRA) quarterly report and corroborated by data from the Private Health Insurance Intermediaries Association (PHIIA), depict a year-on-year surge in hospital cover purchases among this age group.

Private health care can be expensive for people aged 70 or more who are taking it out for the first time especially if they don’t purchase a policy that provides adequate cover for their needs.

Not only do older people have more complex health problems, which require more expensive coverage, but they will also pay a 70% of the lifetime health cover loading fee (LHCL). The LHCL is applied to all Australias by 2% each year that they don’t take out private health insurance from the age of 31.

While it is possible to buy health insurance “off the shelf” directly from insurers, it’s important to find a policy that fits each individual’s situation.

Speaking to a health insurance expert is the best way to choose from the range of insurers and policies to get the best possible value. The right cover will help older Australians avoid growing public waiting lists (once their 12-month waiting period has been served).

The surge in interest in private health insurance among older Australians can be attributed to long elective surgery waiting times in the public system, which remains high post-Covid. 

The Australian Medical Association (AMA) estimates that the waiting list for Australians in need of public elective surgery is half a million individuals.  There are another estimated 400,000 on what’s called the ‘hidden waiting list’ who are patients still waiting to be seen as outpatients before surgery can be scheduled. 

Currently, the median waiting time for a hip replacement in the public system is 293 days and cataract surgery is 158 days.

In 2020-21, the Australian Institute of Health and Welfare reported that approximately 40 percent of all elective surgeries performed in Australia, including hip and knee replacements, were for patients aged 65 and over.

This age group also accounted for more than 40 percent of day and overnight hospital admissions, despite comprising just over 15 percent of the population.

Year-on-year comparison figures from the Private Health Insurance Intermediaries Association (PHIIA) show an increase in older Australians taking out private health cover:

50-54 year olds: increase by 8.3%

55-59 increase by 6.1%

60-64 increase by 8.5%

65-69 increase by 9.5%

70-74 increase by 11.2%

75-79 increase by 26.1%

80-84 increase by 8.7%

85+ no change

Kate Browne, head of research from Compare Club, the country’s leading health insurance comparison website, has issued a cautionary message to older Australians considering private health insurance options. 

“If you are in this age bracket and you are looking to take out private health insurance for the first time, it’s critical to find a hospital cover that includes the procedures you are likely to need as you age."

"Basic, Bronze, and many Silver policies simply don’t cover these which means you are being hit with unexpected out-of-pocket expenses."

"As we see a surge in older Australians seeking private health insurance for the first time, it's essential that they get the right advice to take out the right kind of cover. 

“While it’s possible to buy health insurance ‘off the shelf’ online or directly from insurers, having a conversation about your exact needs and being able to go through a wide range of options can be a better approach as you will be clear on what you will be covered for and what you are up for cost wise, upfront.” 

“Good private health insurance taken out when you are over 65 is not going to be cheap, but unless you are careful, you could end up paying for an expensive policy that still doesn’t cover you for what you need. If you are going to pay, make sure it counts so you get the best cover and can avoid those public hospital waiting lists.”

“For younger Australians, our message is to consider taking out health insurance before you turn 31 to avoid the costly young and old, is clear: when it comes to private health insurance, early planning is key."

"By securing a policy in your thirties, you not only avoid costly lifetime health cover loading fees but also ensure you're prepared for potential health challenges down the road. Compare Club is here to guide you through this process, helping you make informed decisions for a healthier future." 

One common pitfall is the need for more transparency in some health insurance options. Many insurers prominently display the lowest policy rates, only revealing the actual costs, including LHC loading, during the final stages of the purchasing process. This lack of clarity can deceive customers about the true cost of their coverage.

For those looking to secure private health insurance, particularly younger individuals, Compare Club today emphasised the importance of entering the system early.

By obtaining affordable policies in their early thirties, individuals can avoid the substantial LHC loading fees that accrue with age. This proactive approach ensures that they are adequately covered when health issues arise in their later years.

Note to editors:

Media enquiries: Justin Kelly M+C Partners press@compareclub.com.au