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Operations Of The Private Health Insurers Annual Report 2006-07

Part B

Operations Review

Membership Statistics (Continued)

Hospital treatment cover by age and gender

Insured persons increased in all age groups over the year except for males aged 55 to 59. A small decrease in males aged 55 to 59 was the result of bracket creep, as many persons in the 55 to 59 age group moved into the 60 to 64 age group. The largest increases were in the 60 to 64 age group, the 25 to 29 age group and children aged 0 to nine.

In table 5, the proportion of insured persons with hospital treatment insurance is compared in each age cohort by gender to the average cover of 43.5%. The largest variation from the average coverage is in the 60 to 64 age cohort, with coverage for females being 62.0% of the corresponding female population, 18.5% higher than average coverage. In the 25 to 29 age cohort coverage of males, at 26.8% the figure is 16.7% less than average cover.

Coverage in the 20 to 29 age group is typically much lower than average. Coverage for insured persons aged 80 and older is also less than average. Insured persons aged between 45 and 74 have higher than average coverage, peaking at 61.1% in the 60 to 64 years age cohort.

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Figure 2 shows the distribution of the number of insured persons covered by five-year age cohort in a population pyramid (inner bars) and includes the uninsured Australian population by age cohort (outer bars). Insured persons with hospital treatment insurance are distributed over age cohorts in similar proportions to the population distribution, but insured persons aged between 20 to 29 inclusive are significantly under-represented compared to hospital treatment insurance coverage in other age cohorts.

Females continue to have a significantly greater coverage than males in all age categories from 20 to 64 and ages 80 and over. The higher proportion of females covered is most noticeable from age 85. Some of this difference may be accounted for by the coverage of war veterans, predominantly male, through the Department of Veterans’ Affairs.

Figure 2. Insured persons and population by age category 2006-07

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Hospital treatment policies

Policies are reported by family type in six membership categories: single, couple, 2+ persons no adults, single parent, family and 3+ adults. The term ‘total family’ is used to refer to all policies that are not single policies.

In the 12 months to 30 June 2007, total hospital treatment policies increased by 167,774, or 4.0%, as shown in figure 3. This comprised an increase in single policies of 92,297 (4.6%) and an increase in total family policies of 75,477 (3.4%).

Single hospital treatment policies increased 4.6%, or 92,297 to 2.078 million.
Single parent hospital treatment policies increased 8.0%, or 5,907 policies, to 80,197.
Couples hospital treatment policies increased 5.6%, or 52,086 policies, to 989,227.
Other hospital treatment policies increased 1.5%, or 17,484 policies, to 1.221 million. These policies comprised the membership categories of family, 2+ persons no adults, and 3+ adults. The latter two policies were formerly reported under the category of family.

Figure 3. Hospital treatment insurance single and total family policies

30 June 2002 to 30 June 2007–07

Figure 3. Hospital treatment insurance single and total family policies

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Hospital treatment cover with an excess and co-payment

In previous reports, PHIAC has detailed the trends in persons covered by front end deductible policies (FEDs). The Private Health Insurance Act 2007, which was introduced in March 2007, uses the term excess and co-payments. These terms are not directly comparable but have sufficient similarities to indicate trends in policies that contain a component whereby the policy holder must pay a certain amount of the cost of treatment before the fund pays any benefits, or where the policy holder pays a certain proportion of the cost of treatment.

Excess and co-payment policies are those where a policy holder agrees to pay an amount of money before private health insurance benefits are payable. A co-payment could apply every time a person insured under the policy goes to hospital in a year, or an excess may be capped at a total amount for the year. The excess and co-payment may vary from product to product. There is a limit to the excess allowed in relation to the Medicare Levy Surcharge. For taxation purposes, taxpayers are exempted from the Medicare Levy Surcharge if they have a hospital treatment policy with an excess no greater than $500 for a policy covering a single person or an excess no greater than $1,000 for a policy covering more than one person. Any policies that commenced cover before 24 May 2000 are exempt from this rule.

There have been several years of upward trend in the proportion of insured persons with some form of excess or co-payment. At 30 June 2007, 68.9% of total insured persons held excess or co-payment policies, or 6.299 million of the more than 9.145 million insured persons covered.

Further information on the excess limits for high-income earners may be obtained from the Department of Health and Ageing, under private health insurance Medicare Levy Surcharge at <www.health.gov.au>.

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