The impact of Covid-19 on Private Health Insurance

We have discussed with you over the past few months how the coronavirus has impacted investments, so this week we thought we would discuss the impact the pandemic is having on private health insurance membership.

According to APRA private health insurance data released last month, the largest net decrease (taking into account movement between age groups) in coverage during the quarter was 11,176 people from the 25 to 29 age group.   This is not surprising given how hard the younger Australians have been affected by the job losses since March.  Younger people are less likely to need their private health and so see this as an expense that they can no longer afford as they start earning less.   This puts further pressure on the private health system where membership is already disproportionately held by aging Australians.

With the Jobkeeper package set to end in September, and private health premium waivers and delayed annual increases ceasing in October, this could see another surge in members exiting the private healthcare system.

With the viability of the sector being closely monitored, it is worthwhile considering the impact the decline in membership could have on medical specialists.

If the number of private patients reduce, the out of pocket fees also reduce as more patients have their procedures performed through the public system.  This could significantly impact cash flow and earnings.

So, considering the private health insurance membership numbers are largely out of your control, what can you do to future proof your income in the event that the level of private patients reduce over the next phase of this pandemic.