Private Healthcare Australia (PHA), which represents private healthcare insurance funds, has proposed that the government introduce a "reverse" lifetime health cover (LHC) discount to those aged between 18 and 30 years who buy hospital cover. The discount would increase by 2% each year for those under 30 and be capped at 10%.
LHC is a government initiative designed to encourage people to take out hospital insurance earlier in life and to maintain their cover.
"Younger individuals have on average a much higher gross margin, [so] adding an additional 150,000 members could be expected to bring in up to A$130 million (US$98 million) in total gross margin [of which] 90% could be expected to be passed on to existing policyholders in the form of lower premiums," the PHA said in its pre-budget submission.
Meanwhile, the number of policyholders subject to a loading on their health insurance policy hit a peak of 1.2 millon in mid-2015 before falling for the first time. At present, 1.1 million people are paying the loading, reported The Sydney Morning Herald. Ms Rachel David, Chief Executive of PHA, said the decline reflected affordability pressures.
Almost half of all Australians do not understand a loading on their health insurance policy, that can add up to 70% to their premiums for those who have delayed taking out hospital cover long after their 31st birthday, new figures show.
More Australians are at risk of being levied with the LHC loading, with new figures showing that 43% have no clue what it is and, therefore, how to avoid it.
Under the Private Health Insurance Act, insurers are allowed to add a 2% loading on top of premiums for each year the member was without hospital cover after turning 31. The loading lasts for 10 years and is capped at 70%.
A survey of more than 2,000 Australians shows only 14% knew the loading goes straight to the health insurance funds' bottomline. The rest thought it went to the Australian Taxation Office, was split between the insurers and the Tax Office, or had no idea.