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Why have private health insurance?

Source: Roy Morgan Single Source (Australia), 12 months to October 2014, n = 51,413; 12 months to October 2018, n = 50,359.
Base: Australians 14+ with health insurance.

The majority of people with private health insurance (70.9%) agree that ‘above all else, private health insurance is about knowing that you will be able to cover the cost of big medical expenses if they arise’. Despite the fact that this has declined from 77.5% over the past four years , it remains the top priority for fund members and is currently narrowly ahead of agreement on ‘health insurance gives me peace of mind’ with 68.1%, which has also declined from 74.5% over the last four years.

These are some of the latest findings from Roy Morgan’s Single Source Survey (Australia) which is based on in-depth personal interviews conducted face-to-face with over 50,000 Australians per annum in their own homes, including detailed questioning of over 8,000 with members of health insurance funds. The latest results presented here are based on the 12 months to October 2018 compared to the same period in 2014.

Declining attitudes towards private health insurance

Since 2014 there has been an adverse trend across the ten statements that have been tracked in the following chart. 

The biggest drop in agreement over the last four years was for ‘it is essential to have private health insurance’ which declined by 10.0% points to 56.2%. The next largest movement was the increase in agreement of 7.7% points for ‘it is difficult to understand what you are actually covered for with private health insurance’, which has risen to 43.7%. This was followed by a decline of 7.1% points for ‘extras and hospital cover are equally important, down 7.1% points to 54.1%.

Attitudes to Private Health Insurance

Source: Roy Morgan Single Source (Australia), 12 months to October 2014, n = 51,413; 12 months to October 2018, n = 50,359. Base: Australians 14+ with health insurance.

Need to consider generational differences in attitudes towards health insurance

There are some major generational differences in attitudes toward private health insurance that must be taken into account when marketing to these very diverse groups. An example of this is the high level of agreement (83.8%) among Pre-Boomers that ‘private health insurance is about knowing that you’ll be able to cover the cost of big medical expenses’, compared to only 56.5% among Gen Z.

"Private health insurance is about knowing that you'll be able to cover the cost of big medical expenses"- by Generations

Source: Roy Morgan Single Source (Australia), 12 months to October 2018, n = 50,359. Base: Australians 14+ with health insurance.

Other differences include Millennials and Gen X who are major growth areas for private health insurance as they enter the life-stage where they generally have more responsibilities with families and mortgages. This is reflected in the fact they are well above in agreeing to issues that relate to the cost of health insurance, such as; ‘I want the cheapest and don’t care provider’; ‘only reason to have it is to avoid paying tax’; and ‘I don’t see much value in having it’.

The following chart shows that Millennials have the highest level of agreement for ‘the only reason to have health insurance is to avoid paying extra tax’, with 22.5%, followed by Gen X on 20.1%. This is in contrast to Pre-Boomers with only 2.6% agreement.

"The only reason to have health insurance is to avoid paying extra tax"- by Generations

Source: Roy Morgan Single Source (Australia), 12 months to October 2018, n = 50,359. Base: Australians 14+ with health insurance.

As would be expected, it is the youngest generation who are the least engaged in private health insurance. Gen Z who are aged 14 to 27 in this analysis, have very low levels of concern when it comes to health issues and in fact are more likely to ‘rely on recommendations from friends and family in choosing a fund.

Norman Morris, Industry Communications Director, Roy Morgan says: 


“Although the attitudes of private health fund members are reasonably favourable, over recent years they have generally shown an adverse trend, which should be of some concern to health funds and the government. It appears that the major decline in considering it essential to have private health insurance is likely to be a response to the lack of perceived value due to rapidly rising premiums and some uncertainty relating to what is covered.

“This research has only covered the attitudes of private health fund members and so it’s likely that people without this insurance are even more adversely predisposed towards health insurance. This makes it a challenge to attract new members as well as retaining existing ones.

“To engage fund members and the population more in health insurance, this analysis has shown that there is a need to understand what motivates different generations to take out health insurance, as they cannot be treated as a single homogeneous group.

“The data used here is only a small part of what is available on the full database that covers private health insurance in-depth and trended over many years. With strong competition it is important to understand the relative strengths and weaknesses of all the major funds. The results shown in this release can be produced at the individual fund level, enabling unique competitive insights. To find out more ask Roy Morgan.”


For comments or more information please contact:
Suela Qemal, General Manager - Financial Services & Consulting
Office: +61 (3) 9629 6888
Suela.Qemal@roymorgan.com


About Roy Morgan

Roy Morgan is the largest independent Australian research company, with offices throughout Australia, as well as in Indonesia, the United States and the United Kingdom. A full service research organisation specialising in omnibus and syndicated data, Roy Morgan has over 70 years’ experience in collecting objective, independent information on consumers.

Margin of Error

The margin of error to be allowed for in any estimate depends mainly on the number of interviews on which it is based. Margin of error gives indications of the likely range within which estimates would be 95% likely to fall, expressed as the number of percentage points above or below the actual estimate. Allowance for design effects (such as stratification and weighting) should be made as appropriate.

Sample Size

Percentage Estimate

40%-60%

25% or 75%

10% or 90%

5% or 95%

1,000

±3.0

±2.7

±1.9

±1.3

5,000

±1.4

±1.2

±0.8

±0.6

7,500

±1.1

±1.0

±0.7

±0.5

10,000

±1.0

±0.9

±0.6

±0.4

20,000

±0.7

±0.6

±0.4

±0.3

50,000

±0.4

±0.4

±0.3

±0.2