Medical cover costs soar for over 45s

By MARTIN JOHNSTON

Tens of thousands of people with Southern Cross health insurance face premium rises of up to 30 per cent - just because they are middle-aged or older.

The new rates take effect in February.

New Zealand's dominant health insurer is introducing a new adult age-band for premiums: 46 to 64 years. At present there are only two: 19 to 64 and 65 and over.

About 300,000 people - 38 per cent of Southern Cross Healthcare's 820,000 members - will be affected by the changes, including dependants of policy holders who fall into the new category.

The not-for-profit friendly society says the changes will make its premiums "fairer" because younger members now subsidise older ones, who make more and costlier claims.

The monthly Regularcare premium for a family (for example) of two adults, aged 47 and 44, and children, 14 and 16, will rise 10 per cent, to $128. Regularcare is the policy held by more than half the members.

General manager (marketing) Paul Regtien said the smallest dollar increase would be $3.78 a month, taking the Kiwicare budget policy to $22.69 for someone aged 46 to 64.

The largest rise would be $35.04, taking the top-of-the-range Ultracare 400 policy to $151.85 a month - a 30 per cent increase - for someone in that age group.

No premiums were being cut.

Mr Regtien said the proportion of policy-holders claiming for non-urgent surgery had risen from 7.7 per cent in 1990 to 14 per cent in the past financial year. A third of those aged over 65 now claimed for surgery.

"One of the major reasons the surgical incidence rate has increased is because of the ageing of our membership."

Medical advances had also increased costs in the middle-aged and older groups, he said, citing diagnostic tests such as magnetic resonance imaging (MRI) and computerised-tomography (CT) scanning.

One longstanding member, Lyndsay Brock, of Devonport, said she would have to "think hard" whether to end her policy in February, when the price would rise 20 per cent to $27.87 a month.

The 56-year-old "struggling artist" and beneficiary said her family had been with Southern Cross for 30 years and had made few claims.

"If I knew then what I know now, I would have put the money in the bank and would have been well covered. Customer loyalty should be rewarded more than it is with Southern Cross."

Mr Regtien said the premium increases had nothing to do with the Southern Cross takeover of health insurer Aetna. The Commerce Commission has approved the takeover on condition that Southern Cross sells Aetna's customer base.

Tower chief executive James Boonzaier, asked if his company was considering health premium rises, said it kept its rates under close review, adding that costs were rising.

Health Funds Association executive director Andrea Pettett said most health insurers set premiums in five-year age bands. It was fairer and prevented policy holders being hit by huge increases at age 65.

Only 34.5 per cent of the population had health insurance, compared with 51 per cent 10 years ago, she said, but there were signs of growth.

Waikato University professor of demography Ian Pool said the huge increase in the proportion of elderly in the population would not occur until 2015 to 2020.

Southern Cross seemed to be giving "a lot of advance warning on that."