Private health insurance industry faces collapse

Australian Prudential Regulation Authority (APRA) board member Geoff Summerhayes has warned that the business models of many private health insurers may not be sustainable beyond 2022. He claims factors such as the growing trend for younger people to opt out of health insurance means that some insurers may not be financially viable within three years, and they may be forced to merge. Summerhayes adds that smaller not-for-profit health funds are the most vulnerable, as they have limited access to capital in comparison to listed health insurers. From The Guardian:

Only three private health funds will be financially viable within two years if the industry does not take urgent action to break out of its “death spiral”, the prudential regulator says…

Summerhayes said payouts from funds were continuing to soar as the price of medical treatments rose and younger people fled private health insurance, leaving the system stuffed with older members who tended to make bigger claims…

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