Younger members continue to abandon PHI funds

APRA’s latest quarterly private health industry (PHI) figures show younger members continue to abandon PHI funds. The biggest drop in 2Q20 on 1H20 was among 30-34-year olds, down 10,286 and the biggest net decline, taking into account movement between age groups, was in the 25-29 age group, down 11,649.

In all, 11.2m people, or 44% of the population, were covered by hospital treatment cover at the end of Dec 2019, down 9,361 or 0.2 percentage points on 1Q20 and down 8,272 or 0.07% on 1H19. Family policies were down by 1,951 and single policies by 1,355.

General treatment memberships in the qtr were up 1,237 but as a percentage of the population it fell 2%, to 53.3%.

PHI premium revenue increased 2.1% on 2H19, to $24.2bn, reflecting increased rates, while profit was up 14.3%.

APRA said the data showed continued deterioration in insurance performance of declining net margins from 5.2% to 3.9%. But profitability improved because of an increase in net investment income, driven mainly by stronger equity returns in the period.

“The industry continues to face risks associated with affordability and the associated value proposition of PHI products,” APRA said. “This has resulted in an ongoing decline in membership, particularly in the younger age groups.”

See also: PHI too expensive, too confusing, too little value: Choice

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