1 00:00:05,680 --> 00:00:07,960 Speaker 1: Welcome to the Fear and Greed Business Interview. I'm sure 2 00:00:08,000 --> 00:00:11,119 Speaker 1: n Ailma. More than half of all Australians have private 3 00:00:11,160 --> 00:00:14,480 Speaker 1: health insurance. But in a cost of living crisis, is 4 00:00:14,520 --> 00:00:17,560 Speaker 1: it an expense that more households are being forced to cut? 5 00:00:17,880 --> 00:00:19,840 Speaker 1: And it leads to an even bigger question. In a 6 00:00:19,840 --> 00:00:22,560 Speaker 1: country like Australia, where we're fortunate to have Medicare and 7 00:00:22,680 --> 00:00:26,760 Speaker 1: more affordable health care, why does private health insurance still matter? 8 00:00:27,040 --> 00:00:30,640 Speaker 1: This episode is supported by AHM Health Insurance, although our 9 00:00:30,720 --> 00:00:35,000 Speaker 1: guest today is an independent insurance expert who examines policies 10 00:00:35,159 --> 00:00:38,160 Speaker 1: right across the sector. Tim Bennett is the lead publisher 11 00:00:38,200 --> 00:00:41,880 Speaker 1: for insurance at comparison website Finder. Tim. Welcome to Fear 12 00:00:41,920 --> 00:00:42,280 Speaker 1: and Greed. 13 00:00:42,520 --> 00:00:42,839 Speaker 2: Thank you. 14 00:00:43,880 --> 00:00:48,760 Speaker 1: First things first, how the hell do you compare insurance policies? 15 00:00:49,240 --> 00:00:51,839 Speaker 1: I know we're talking about healthy today, but wow, it 16 00:00:51,960 --> 00:00:53,159 Speaker 1: is a complex sector. 17 00:00:53,680 --> 00:00:57,920 Speaker 2: Yeah, I think it applies across all insurance categories. It's 18 00:00:57,920 --> 00:01:03,720 Speaker 2: a complex product'savily underwritten, often heavily regulated, especially in health insurance, 19 00:01:04,280 --> 00:01:08,080 Speaker 2: and the process of comparing is really about analyzing exactly 20 00:01:08,120 --> 00:01:10,560 Speaker 2: what your needs are as an individual, as a homeowner, 21 00:01:10,560 --> 00:01:14,240 Speaker 2: as a car owner, and then trying to match the policy. 22 00:01:14,440 --> 00:01:16,880 Speaker 2: That's not always easy. We do try to help, but 23 00:01:17,040 --> 00:01:19,360 Speaker 2: sometimes it does require a bit of legwork. 24 00:01:19,400 --> 00:01:22,480 Speaker 1: A lot of legwork. Let's talk about private health insurance. 25 00:01:23,000 --> 00:01:25,480 Speaker 1: Does it still matter? It does so. 26 00:01:25,520 --> 00:01:28,399 Speaker 2: As you mentioned in your intro, health insurance in Australia 27 00:01:28,880 --> 00:01:32,120 Speaker 2: is a little bit different to other countries, certainly the 28 00:01:32,200 --> 00:01:34,560 Speaker 2: United States, where there isn't really a public option at all. 29 00:01:34,560 --> 00:01:38,560 Speaker 2: We've got Medicare, and Medicare is robust and it may 30 00:01:38,600 --> 00:01:40,840 Speaker 2: be less funded than it used to be relative to 31 00:01:41,360 --> 00:01:43,120 Speaker 2: what it's uked to do, but at the end of 32 00:01:43,160 --> 00:01:45,479 Speaker 2: the day, it still will keep you alive if things 33 00:01:45,520 --> 00:01:49,640 Speaker 2: go really, really south. The thing about private healthcare in 34 00:01:49,680 --> 00:01:53,600 Speaker 2: Australia is twofold. One is that the Medicare public hospital 35 00:01:53,640 --> 00:01:56,040 Speaker 2: system is perhaps not as robust as it could be. 36 00:01:56,640 --> 00:01:59,440 Speaker 2: Waiting times for elective surgery are pretty long, and we 37 00:01:59,520 --> 00:02:01,560 Speaker 2: are seeing, you know, I don't want to get too 38 00:02:01,600 --> 00:02:04,240 Speaker 2: much into the detail of the policy, but maybe some 39 00:02:04,280 --> 00:02:06,920 Speaker 2: slightly lower standards of care than we would like. Private 40 00:02:06,920 --> 00:02:10,320 Speaker 2: hospitals do give you another option. And then secondly, the 41 00:02:10,320 --> 00:02:13,360 Speaker 2: government does want us to take out private health insurance 42 00:02:13,400 --> 00:02:16,720 Speaker 2: to take the burden off the public system, and so 43 00:02:16,880 --> 00:02:20,400 Speaker 2: there are those tax implications that individuals will have to 44 00:02:20,440 --> 00:02:22,760 Speaker 2: face if they don't have a private health insurance. 45 00:02:23,280 --> 00:02:27,480 Speaker 1: So once you reach a certain age, you will pay 46 00:02:27,840 --> 00:02:30,360 Speaker 1: for it in a tax sense if you don't have 47 00:02:30,400 --> 00:02:33,040 Speaker 1: private health insurance. Is that broadly what we're talking about. 48 00:02:33,080 --> 00:02:36,320 Speaker 2: Broadly, yes, but it's funny, there's a bit of confusion 49 00:02:36,320 --> 00:02:40,400 Speaker 2: out there. There are two different schemes that primarily are 50 00:02:40,440 --> 00:02:43,960 Speaker 2: worth mentioning. One is the lifetime health care surcharge. That's 51 00:02:43,960 --> 00:02:46,160 Speaker 2: the one where when you hit thirty years old, every 52 00:02:46,280 --> 00:02:49,360 Speaker 2: year you don't have private health insurance, the cost of 53 00:02:49,360 --> 00:02:51,679 Speaker 2: private health insurance for you when you eventually take it out, 54 00:02:51,800 --> 00:02:54,040 Speaker 2: goes up by two percent. So if you don't get 55 00:02:54,040 --> 00:02:57,000 Speaker 2: private health insurance this hospital specifically until you're forty, you'll 56 00:02:57,000 --> 00:03:01,280 Speaker 2: pay an extra twenty percent. Then there's high earners tax, 57 00:03:01,320 --> 00:03:03,280 Speaker 2: so that's the Medicare levy surcharge. So on top of 58 00:03:03,320 --> 00:03:06,040 Speaker 2: the Medicare levy which everyone pays if you earn over 59 00:03:06,400 --> 00:03:09,400 Speaker 2: it's about ninety seven thousand dollars per year for an individual, 60 00:03:09,560 --> 00:03:12,800 Speaker 2: including super you will pay an extra one to one 61 00:03:12,800 --> 00:03:15,560 Speaker 2: point five percent of your tax. So there's two separate systems. 62 00:03:15,600 --> 00:03:18,560 Speaker 2: But essentially, if you don't have private health insurance, you'll 63 00:03:18,600 --> 00:03:19,040 Speaker 2: pay more. 64 00:03:19,680 --> 00:03:22,120 Speaker 1: What are we seeing with private health insurance? Our household's 65 00:03:22,160 --> 00:03:25,320 Speaker 1: cutting back on their coverage or potentially dropping it all together. 66 00:03:25,880 --> 00:03:30,120 Speaker 2: It's funny. Up until the COVID pandemic, we saw less 67 00:03:30,160 --> 00:03:34,120 Speaker 2: people taking out private health insurance, especially in the younger demographic, 68 00:03:34,160 --> 00:03:38,080 Speaker 2: and that's a problem because that makes private health insurance 69 00:03:38,160 --> 00:03:40,920 Speaker 2: more expensive overall. One thing about Australia is we all 70 00:03:40,960 --> 00:03:43,720 Speaker 2: pay more or less the same price for private health 71 00:03:43,760 --> 00:03:46,680 Speaker 2: insurance whether you're old or young, and so when more 72 00:03:46,720 --> 00:03:49,080 Speaker 2: young people drop out of the system, it increases the 73 00:03:49,120 --> 00:03:52,240 Speaker 2: cost of providing that insurance and drives up costs over all. 74 00:03:52,240 --> 00:03:56,280 Speaker 2: Because it's an aging demographic. Pandemic kind of changed that 75 00:03:56,360 --> 00:03:59,040 Speaker 2: and people started taking out insurance a bit more. That 76 00:03:59,160 --> 00:04:01,520 Speaker 2: being said, it's been a few years since the pandemic 77 00:04:01,600 --> 00:04:04,800 Speaker 2: and now the cost of living crisis is kicking into gear, 78 00:04:04,920 --> 00:04:06,800 Speaker 2: and yeah, we are seeing a lot of people reviewing 79 00:04:06,840 --> 00:04:10,840 Speaker 2: those insurance needs, and not just across health insurance, but 80 00:04:11,080 --> 00:04:15,240 Speaker 2: right across all insurance categories deciding to downgrade or get 81 00:04:15,360 --> 00:04:19,520 Speaker 2: rid of it entirely. That's not always a good idea. 82 00:04:19,680 --> 00:04:22,240 Speaker 2: Insurance is one of those costs that you don't really 83 00:04:22,240 --> 00:04:24,440 Speaker 2: see the value of until you really need it. So 84 00:04:24,760 --> 00:04:28,160 Speaker 2: it's hard to provide specific advice. I try to mention 85 00:04:28,240 --> 00:04:30,599 Speaker 2: this as general advice, but you know it can definitely 86 00:04:30,640 --> 00:04:31,160 Speaker 2: be a mistake. 87 00:04:31,800 --> 00:04:38,960 Speaker 1: Stay with me, Tim, we'll be back in a minute. 88 00:04:40,640 --> 00:04:43,919 Speaker 1: I'm speaking to Tim Bennett from Finding dot com dot au. 89 00:04:45,360 --> 00:04:49,719 Speaker 1: So my kids think about private health insurance very different 90 00:04:49,760 --> 00:04:51,640 Speaker 1: to me. I'm mid fifties. I had a father who 91 00:04:51,640 --> 00:04:53,800 Speaker 1: is an invalid, who got so much worth out of 92 00:04:53,800 --> 00:04:56,960 Speaker 1: his health insurance that I think for generations my family 93 00:04:57,200 --> 00:04:59,680 Speaker 1: kind of get the benefit of health insurance. But my kids, 94 00:05:00,160 --> 00:05:03,880 Speaker 1: you know, in their early twenties, they don't see any 95 00:05:03,920 --> 00:05:06,440 Speaker 1: need for health insurance, I mean up until the age 96 00:05:06,480 --> 00:05:08,440 Speaker 1: of thirty, because they're not going to be penalized. Is 97 00:05:08,480 --> 00:05:11,479 Speaker 1: that fair or do you think that that kind of 98 00:05:11,560 --> 00:05:14,400 Speaker 1: younger cohort? And this is to the point about, you know, 99 00:05:14,400 --> 00:05:17,320 Speaker 1: we're all paying the same amount of insurance premiums. Should 100 00:05:17,360 --> 00:05:19,440 Speaker 1: they avoid it? Should we rethink the system so that 101 00:05:19,480 --> 00:05:21,200 Speaker 1: they actually pay less because in the end, I'm going 102 00:05:21,240 --> 00:05:22,720 Speaker 1: to use health insurance more than they are in the 103 00:05:22,760 --> 00:05:25,160 Speaker 1: next twenty years. Like, how should they be thinking about it? 104 00:05:25,560 --> 00:05:27,720 Speaker 2: There's two sides of that question. On one hand, there's 105 00:05:27,760 --> 00:05:30,400 Speaker 2: the individual, then there's the policy question. And from an 106 00:05:30,440 --> 00:05:33,640 Speaker 2: individual perspective, I get it. You know, as a relatively 107 00:05:33,680 --> 00:05:37,400 Speaker 2: young person myself, I'm starting to feel a little bit 108 00:05:37,440 --> 00:05:39,760 Speaker 2: of those effects of getting older, and so maybe I'm 109 00:05:40,080 --> 00:05:42,680 Speaker 2: getting a little bit more respect for my insurance coverage. 110 00:05:42,920 --> 00:05:47,680 Speaker 2: But if you're unlikely to need any major surgery beyond emergency, 111 00:05:47,680 --> 00:05:49,680 Speaker 2: which would be covered by the public system anyway, I 112 00:05:49,680 --> 00:05:53,560 Speaker 2: can absolutely see why private health insurance maybe doesn't feel 113 00:05:53,960 --> 00:05:58,000 Speaker 2: as irrelevant. And because we have that flat premium system 114 00:05:58,440 --> 00:06:02,560 Speaker 2: relative to other countries, younger private health insurance customers do 115 00:06:02,640 --> 00:06:05,719 Speaker 2: pay a decent amount. There is definitely an argument, I think, 116 00:06:05,760 --> 00:06:09,960 Speaker 2: to say that the incentives or disincentives aren't enough. If 117 00:06:09,960 --> 00:06:11,680 Speaker 2: we're going to have this two tier sis, or this 118 00:06:11,960 --> 00:06:15,040 Speaker 2: mixed system I should say, of private and public, then 119 00:06:15,080 --> 00:06:17,960 Speaker 2: we need to make the incentive for people to get 120 00:06:18,040 --> 00:06:20,880 Speaker 2: private health insurance. The AMA has spoken to this as well. 121 00:06:20,920 --> 00:06:24,480 Speaker 2: They don't believe that the lifetime health cover loading or 122 00:06:24,520 --> 00:06:28,120 Speaker 2: there is a small youth discount for twenty somethings, but 123 00:06:28,200 --> 00:06:30,240 Speaker 2: they argue that it's not enough, and I think i'd 124 00:06:30,279 --> 00:06:32,680 Speaker 2: back that argument that we probably need to do a 125 00:06:32,680 --> 00:06:34,599 Speaker 2: little bit more if we're going to have this system 126 00:06:34,600 --> 00:06:37,279 Speaker 2: and commit to it to get younger people enrolled. 127 00:06:37,680 --> 00:06:40,200 Speaker 1: Okay, so what is happening to premiums In the last 128 00:06:40,240 --> 00:06:42,360 Speaker 1: few years, we hear a lot of complaints about the 129 00:06:42,360 --> 00:06:44,200 Speaker 1: cost of insurance. Are they rising? 130 00:06:44,920 --> 00:06:47,880 Speaker 2: Insurance overall as a sector is rising, and it's outstripping inflation. 131 00:06:48,040 --> 00:06:50,799 Speaker 2: Just to give you an example, we've seen car insurance 132 00:06:50,800 --> 00:06:52,719 Speaker 2: premiums go up by about ten percent in the last 133 00:06:52,760 --> 00:06:54,960 Speaker 2: twelve months, and I think it's closer to twenty to 134 00:06:54,960 --> 00:06:56,680 Speaker 2: twenty five percent if you look over three years, and 135 00:06:56,720 --> 00:07:00,000 Speaker 2: that's well more than inflation even in that inflation crisis 136 00:07:00,120 --> 00:07:02,800 Speaker 2: that we've seen in over the last twelve to eighteen months. 137 00:07:03,800 --> 00:07:07,120 Speaker 2: Health insurance is a little bit different because health insurance 138 00:07:07,160 --> 00:07:10,880 Speaker 2: is highly regulated. So what happens every year is the 139 00:07:11,040 --> 00:07:13,360 Speaker 2: private health insurers actually have to apply to the government 140 00:07:13,600 --> 00:07:15,880 Speaker 2: and then the Health Minister has to approve those and 141 00:07:15,960 --> 00:07:19,520 Speaker 2: Mark Butler, infamously, I guess now, is actually knocked back 142 00:07:19,920 --> 00:07:23,800 Speaker 2: that price rise the first round, probably mostly for political reasons, 143 00:07:24,200 --> 00:07:26,120 Speaker 2: but what it meant is that private health insurers have 144 00:07:26,200 --> 00:07:28,720 Speaker 2: to actually go down. Now the average price rise is 145 00:07:28,720 --> 00:07:31,160 Speaker 2: about three percent this year, and it's been about that 146 00:07:31,160 --> 00:07:34,720 Speaker 2: the last couple of years, that's significantly lower than the 147 00:07:34,760 --> 00:07:38,800 Speaker 2: price rises across other insurance categories. What we have seen, though, 148 00:07:39,240 --> 00:07:42,600 Speaker 2: is that different types of health insurance, different tiers have 149 00:07:42,720 --> 00:07:44,720 Speaker 2: risen at different rate. So, for example, if you're on 150 00:07:44,760 --> 00:07:47,240 Speaker 2: a Gold policy, which is a much higher standard of care, 151 00:07:48,000 --> 00:07:50,119 Speaker 2: you've seen prices there rise by up to twenty percent 152 00:07:50,240 --> 00:07:54,480 Speaker 2: or more. And that's because those Gold policies protect more 153 00:07:54,520 --> 00:07:57,960 Speaker 2: complex they cover more complex treatments, and so that's kind 154 00:07:58,000 --> 00:08:01,400 Speaker 2: of where the premium impact has been felt the most. 155 00:08:02,080 --> 00:08:06,440 Speaker 1: I can't the insurers themselves do. They adapt quickly to 156 00:08:06,800 --> 00:08:11,200 Speaker 1: the needs of their customers, and the pandemic is a 157 00:08:11,240 --> 00:08:15,600 Speaker 1: great example. There was a talk about what's excluded that 158 00:08:15,720 --> 00:08:18,000 Speaker 1: type of thing. Is it a sort of dynamic industry 159 00:08:18,040 --> 00:08:21,160 Speaker 1: where the insurers do chop and change to kind of 160 00:08:21,200 --> 00:08:22,760 Speaker 1: try and meet the needs of. 161 00:08:22,800 --> 00:08:26,960 Speaker 2: Customers sometimes and sometimes not, and that's not always up 162 00:08:26,960 --> 00:08:29,280 Speaker 2: to their funds. I think there's a really good example 163 00:08:29,320 --> 00:08:33,280 Speaker 2: there with hospital and extras hospital they're very different products. 164 00:08:33,559 --> 00:08:36,559 Speaker 2: I almost tell people don't conflate them because they are 165 00:08:36,640 --> 00:08:40,640 Speaker 2: not comparable. Hospital is about getting to a private hospital 166 00:08:40,640 --> 00:08:42,800 Speaker 2: and getting treatment there as opposed to a public hospital. 167 00:08:42,800 --> 00:08:47,079 Speaker 2: Whereas extras is all outside of hospital. In hospital coverage, 168 00:08:47,520 --> 00:08:50,520 Speaker 2: the insurers are fairly limited in what they can change 169 00:08:50,559 --> 00:08:54,160 Speaker 2: because the government has this very clean regulatory policy around 170 00:08:54,200 --> 00:08:56,960 Speaker 2: health insurance, which I think is appropriate in many ways. 171 00:08:57,559 --> 00:09:00,800 Speaker 2: Extras there's a lot more flexibility. Solast couple of years 172 00:09:00,920 --> 00:09:05,120 Speaker 2: we saw a lot of private health insurance funds change 173 00:09:05,200 --> 00:09:08,600 Speaker 2: up their extras policies to add more flexibility to let 174 00:09:08,640 --> 00:09:10,800 Speaker 2: you sort of peak what you want covered and for 175 00:09:10,880 --> 00:09:13,640 Speaker 2: how much, as opposed to just a stock standard policy 176 00:09:13,679 --> 00:09:17,160 Speaker 2: that might cover you know, glasses, dental physio the same 177 00:09:17,200 --> 00:09:20,040 Speaker 2: as every other policy. So that's where there's a lot 178 00:09:20,080 --> 00:09:22,840 Speaker 2: of interesting innovation in the health insurance space. It's in 179 00:09:22,840 --> 00:09:24,040 Speaker 2: that extras category. 180 00:09:24,600 --> 00:09:27,480 Speaker 1: Generally, this is very wrapping up the conversation. The overall 181 00:09:27,600 --> 00:09:30,719 Speaker 1: health of the health insurance sector at the moment. 182 00:09:31,240 --> 00:09:34,960 Speaker 2: I think, by and large it's pretty robust. The private 183 00:09:34,960 --> 00:09:39,160 Speaker 2: insurance funds made a decent amount of profit during COVID 184 00:09:39,240 --> 00:09:42,640 Speaker 2: because people weren't, you know, using their benefits, they weren't 185 00:09:42,640 --> 00:09:45,160 Speaker 2: going in for surgery. They ended up sort of pushing 186 00:09:45,160 --> 00:09:48,120 Speaker 2: out a few rebates or refunds over the course of 187 00:09:48,160 --> 00:09:49,679 Speaker 2: those years because they didn't want to get in trouble 188 00:09:49,679 --> 00:09:52,800 Speaker 2: with the agable C, but the funds are doing pretty well. 189 00:09:53,320 --> 00:09:56,599 Speaker 2: I think if we were to identify the problem with 190 00:09:56,640 --> 00:10:01,280 Speaker 2: Australia's healthcare system, it probably is more on the public side, 191 00:10:02,080 --> 00:10:05,600 Speaker 2: and they are linked because you know, funding goes to 192 00:10:05,720 --> 00:10:09,360 Speaker 2: both private health insurance funds in various ways as well 193 00:10:09,400 --> 00:10:11,640 Speaker 2: as to the public system. So if the public system 194 00:10:11,679 --> 00:10:14,360 Speaker 2: is you know, not doing as well and not really 195 00:10:14,480 --> 00:10:18,480 Speaker 2: suiting the needs that it should, then then there's a 196 00:10:18,559 --> 00:10:21,079 Speaker 2: sort of a balance piece. So I think that's probably 197 00:10:21,120 --> 00:10:23,240 Speaker 2: the thing that I would say is falling down at 198 00:10:23,240 --> 00:10:26,200 Speaker 2: the moment, and they are intimately connected and I would 199 00:10:26,200 --> 00:10:29,559 Speaker 2: be very surprised if the Commonwealth Government wasn't thinking about 200 00:10:29,559 --> 00:10:31,640 Speaker 2: this and maybe thinking about reform in the coming years. 201 00:10:31,920 --> 00:10:34,360 Speaker 1: Tim, thank you for talking to Fear and Greed Love It. 202 00:10:34,400 --> 00:10:34,680 Speaker 2: Thank you. 203 00:10:35,040 --> 00:10:38,920 Speaker 1: That's Tim Bennett, insurance expert from comparison website Finder. This 204 00:10:39,080 --> 00:10:41,640 Speaker 1: is the Fear and Greed Business Interview, sponsored today by 205 00:10:41,720 --> 00:10:44,680 Speaker 1: a HM Health Insurance. Join us every morning for the 206 00:10:44,679 --> 00:10:46,920 Speaker 1: full episode of Fear and Greed Business Years for people 207 00:10:46,920 --> 00:10:49,840 Speaker 1: who make their own decisions. I'm Schelm. Enjoy your today.