The federal government is being urged to scrap its plan to allow health insurance companies to offer discounts to young adults, with critics warning this will only increase the prevalence of low-value junk policies.
In the government's proposed overhaul of private health insurance last year, federal health minister Greg Hunt said the government would allow health funds to give discounts of up to 10% on hospital cover to people aged 18 to 29 with the larger aim of improving affordability. Funds will offer discounts of 2% a year for a maximum of five years.
But consumer advocacy group Choice said this plan was flawed, arguing it will lead to health funds luring young people into poor-value policies they don't need, reports The Sydney Morning Herald.
“While the cost of private health insurance is one of the top concerns that needs to be addressed, cost cannot be looked at in isolation," Ms Katinka Day of Choice said.
"Discounted private health insurance cover isn’t worth it if you don’t need the cover in the first place."
She said despite a range of carrots and sticks such as government rebates, Medicare Levy Surcharge and Lifetime Health Cover Loading, young Australians continued to be less interested in health insurance than other age groups.
"If existing incentives for young people to take up [insurance] are not proving to be successful, an age-based premium discount for hospital is likely to be no different."