Healthcare premiums hit elderly

Pensioners spoke out angrily yesterday after the country's biggest health insurer hiked its premiums for the elderly in what it called a rebalancing of costs.

Southern Cross Healthcare, which insures 20 per cent of New Zealanders, will raise the premium for a 70-year-old on its hospital and specialist care plan by 17 per cent in the year starting on July 1.

But it will slash the premium for a 20-year-old on the same plan by 27 per cent. Other clients will face increases ranging from 3.5 per cent at age 30 to 16 per cent at age 60.

Chief executive Ian McPherson said the rebalancing was driven by both the rising costs and rising numbers of claims in the older age brackets for expensive operations such as knee replacements, where Southern Cross' spending ballooned by 24 per cent in the year to last September.

But Auckland widow Stella Isbey, who declines to give her age but says she "won't see 75 again", said she would quit on principle.

"I've been paying into it for 40 years," she said. "It's a bloody cheek because their premiums are pretty high and I feel that older retired people don't have very much.

"I feel that the price of everything is going up and they are going to lose a lot of retired people because they just can't afford to pay their premiums."

The proportion of New Zealanders with health insurance has dropped from 50 per cent to 33 per cent since the early 1990s because of premium rises.

Eric Bullen, 85, of Onehunga, had health insurance for 50 years but quit 18 months ago because he could not afford the premium on his superannuation, which is now $263.90 a week.

The hospital and specialist premium for a 70-year-old will rise from July 1 from $34.96 to $40.90 a week for those who have claimed below a "low claims" threshold in the previous two years, and from $38.85 to $45.44 for those who have claimed above it.

In contrast, the premiums for 20-year-olds will drop from $6.73 to just $4.88 a week with the low claims rebate, and from $7.46 to $4.88 for those who have claimed above the threshold.

Dr McPherson said the non-profit Southern Cross Medical Care Society was forced to weight the premiums against the elderly because of competition for the younger market.

"At the moment young people won't join health insurance if the premium is too high," he said.

"Our contracts with our customers are annual.

"You pay your premium and get covered for the next year. It's not a banking scheme."

He said Australia regulated health insurers to require the same premium at all ages, but New Zealand did not.

"We need to work with the Government to look at this problem of health costs for older people," he said.

He said Southern Cross' total spending rose by 8.5 per cent in the year to September, reflecting a 5.8 per cent rise in medical costs per claim plus a 2.6 per cent rise in the number of claims.

The society was using reserves to reduce the average premium increase to 6.5 per cent.