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Cutting coverage: Millions switch or ditch health insurance to save on costs

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Millions of Australians are switching or ditching their health insurance policy as the cost of living soars, according to new research by Finder.

A Finder survey of 1,070 respondents – 605 of whom have private health cover – revealed 1 in 7 (15%) struggled to pay for their health insurance policy over the past year.

The research found 3% of Aussies – equivalent to 354,000 people – cancelled their health insurance in the past 12 months due to cost of living pressures.

A further 5% – 590,000 members – switched to another provider when their cover became unaffordable.

The research shows 7% of Australians (827,000 members) have downgraded their cover – lowering the tier of their plan – to save money.

According to APRA figures, as of December 2023, 44.9% of Australians (12.1 million people) have private hospital cover and 54.6% of Australians (14.7 million people) have private extras cover.

Tim Bennett, insurance expert at Finder, said millions of households are facing health insurance affordability stress.

"The cost of protection is proving unaffordable for many, and insurance is often where people start cutting back.

"Unfortunately the benefits of insurance might not be obvious until it's too late - underinsurance is the reality for a growing number of Aussies living in a cost of living crisis."

The average cost of private health insurance is around $160 per month for a single person ($1,920 a year).

Health insurance premiums are going up by an average of 3.03% in 2024.

Bennett said 3.03% is on the lower end of how much health cover goes up each year.

"Remember, ditching private hospital cover altogether could end up costing you at tax time.

"The Medicare levy surcharge is an added tax for Australians who earn over $93,000. You can avoid it with a $17-a-week hospital policy.

"It's a win-win because it reduces the load on the public health system and you can get the benefits of private cover.

"Even if you're not a high earner, getting a hospital policy can save you from the Lifetime Health Cover loading, which kicks in at age 31."

Bennett said private health cover offers a range of cover to help maintain everyday health, not just in an emergency.

"Your annual eye and dental check-ups can be covered, you can get discounts on selected purchases, and you can save on tax."

Have cost of living pressures led you to change your health insurance in the last 12 months?
Yes, I cancelled my health insurance3%
No, but I switched health insurance for another reason4%
Yes, I switched to another provider5%
Yes, I lowered the tier of my plan (e.g. changed from silver to bronze)7%
No81%
Source: Finder survey of 1,070 respondents, 605 of whom have health insurance, February 2024

Methodology

  • Finder's Consumer Sentiment Tracker is a monthly recurring nationally representative survey of more than 60,000 respondents.
  • Figures in this release are based on 1,070 respondents from February 2024, 605 of whom have health insurance.
  • The Consumer Sentiment Tracker is owned by Finder and operated by Qualtrics, an SAP company.
  • The survey has been running monthly since May 2019.

Finder analysed 400+ health insurance policies in Australia. These ones are excellent.

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