Health insurers are planning to launch their own private insurance offering as part of their drive to boost competition and boost prices, it has been claimed.
The move comes amid rising concern about a “death spiral” in the insurance market as insurers continue to raise premiums, as well as a growing number of Australians with employer-sponsored health insurance who can no longer afford it.
The private insurers are expected to launch the new offering by the end of 2018.
The idea comes amid growing concern about the “death spirals” in Australia’s health insurance market, with the number of people on the individual market having dropped by more than 50 per cent in the past two years.
Health insurers say their competitors have raised premiums and refused to offer their policies to new customers, with many insurers having already raised prices, leaving some people with no choice but to buy a private policy.
However, many of the new policies have lower deductibles and co-payment rates, which has led to people choosing to buy their own policies, rather than relying on private insurers.
Health Minister Greg Hunt says it’s vital that people can afford to purchase a private health insurance policy.
Mr Hunt told the ABC’s Insiders program that the new private insurers would offer plans to people who cannot afford them.
“They will be a private company offering plans to help people who can’t afford it, and it will be able to cover those people who are able to afford it,” he said.
He said the government was committed to helping those people “to get the best deal that they can afford”.
“There are a lot of things that are on offer in the private market, which are all part of the package that you will be getting with your private health insurer,” Mr Hunt said.
“The problem that is driving people out of the private sector, which is why we are introducing a private insurance policy, is the high cost of insurance.”
Health Minister Craig Emerson said the new policy would be similar to the one that is currently offered by private insurers and that it would be subject to the same rules.
“There’s going to be the same amount of coverage for the same price,” he told ABC Radio Canberra.
“But it’s going a bit different because you’re going to get a private insurer, not a government-run one, and there’s a lot more of a choice about what you can afford.”
“It’s not going to provide the same level of coverage to all people,” he added.
In the meantime, many people with private health insurers will continue to pay higher premiums than those who buy private policies, with some people paying as much as $700 a year more for their private insurance.
Health and Disability Services Minister David Littleproud said he was pleased with the government’s plans for the private insurance market.
“We’re looking at what’s the best way to get people onto the private health market,” he tells ABC Radio.
“[There’s] a range of ideas that we’re considering, but we’re not going into the private industry and trying to make a decision right now.”
The Australian Health Insurance Council (AHIC) said that if people could afford a private plan they would not be deterred from buying one, but there were many people who had not been able to.
The AHIC said that the cost of private health coverage had increased from $300 per year to $800 a year over the past 12 months, which was due to increases in premiums and out-of-pocket costs.
According to the AHIC, more than 70 per cent of the nation’s people with health insurance are now on private health plans.
However, the AHic also said that only a small percentage of people who were not insured in the previous 12 months had paid more than $600 for a private healthcare plan.
Private insurers were expected to be a part of Mr Hunt’s Budget speech this week.
Read more from ABC News.