Bupa biggest loser in private health exodus
Australia's biggest life insurer, Bupa, lost nearly 80,000 customers of its hospital cover policies last year, making it by far the biggest loser in the ongoing exodus of customers from private health funds.
New figures from the Australian Prudential Regulation Authority (APRA) show Bupa remained the biggest player by customer numbers in the 2018-19 financial year, with almost 3.6 million customers, just ahead of Medibank's 3.54 million.
But the UK-headquartered insurance and healthcare giant's losses in Australia – 50,000 net customer losses across all products, and almost 80,000, or 2 per cent, of its core hospital cover customers – dwarfed those of its main competitors.
ASX-listed Medibank lost just over 16,000 of its hospital cover customers, but overall it made a modest gain of around 6000 customers. Hospital cover makes up around 80 per cent of the total customer base for both insurers.
But not-for-profit fund HCF and ASX-listed NIB – Australia's third and fourth biggest health insurers, respectively – gained hospital cover customers. HCF's were up 50,000 to 1,388,702, while NIB's were up 6000 to 936,175.
Across all health funds, the number of Australians with private health insurance hospital cover fell by more than 30,000 in the financial year, continuing a downward trend that the Grattan Institute has called a "death spiral".
The APRA figures show 11,227,569 people had hospital cover in the financial year, down from 11,259,263 the previous year. The number of people with general cover increased by around 50,000 to 2,373,768, suggesting people were dropping their comprehensive cover in favour of basic cover, or simply falling back on the publicly-funded Medicare system.
'Unconscionable'
A Bupa spokesman said its high customer losses could be put down to two factors: its lack of a budget product, and its decision in March to only allow customers to benefit from its "Medical Gap Scheme" – a scheme to protect customers from out of pocket expenses – if they attend specially approved hospitals.
The Australian Medical Association (AMA) campaigned against the decision.
"This favours people being treated in Bupa-contracted facilities and that behaviour is unconscionable because we need to have a range of facilities that are available to people, that are appropriate to their clinical care, and where doctors choose to do that work should be their choice, not an insurer's choice," Professor Brad Frankum, president of the AMA's New South Wales branch, said at the time.
The backlash against the decision prompted Bupa to back down in June, but a spokesman said the opposition from doctors still contributed to the loss of customers.
Affordability concerns have seen customers opt for budget rather than premium products, and Bupa's lack of a budget product put it at a disadvantage against competitors like Medibank and NIB.
Medibank revealed in its full-year results that its budget brand AHM had single-handedly allowed the company to grow its customer base last year. The AHM business, which markets itself as "no-nonsense" health insurer and accounts for around one fifth of Medibank's policyholders, grew its policyholder numbers by 7.9 per cent. The Medibank brand, meanwhile, lost 1 per cent of its policyholders, bringing overall policyholder growth to 0.8 per cent.
The APRA figures released on Tuesday did not include the percentage of the population that has health insurance. According to APRA's most recent annual figures, at the end of 2018, 44.6 per cent of Australians had hospital cover, down from 45.6 per cent the previous year. The fall continued a five year trend that has seen young people in particular opt out of private cover.
Speaking on ABC's Insiders program on Sunday, Health Minister Greg Hunt dismissed concerns the private health insurance sector was in a "death spiral".
"I would refer to the 'death spiral' talk as a complete exaggeration," he said. "The number of people who left private health insurance was less than 0.3 of a per cent during the financial year. I don't feel that we're at the edge of the cliff as some commentators may have you believe."
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