Older Southern Cross members to pay up to 72pc more

By ANDREW LAXON

Southern Cross has announced premium rises of up to 72 per cent for its older members - but refuses to say by how much it is increasing premiums overall.

The country's biggest health insurer will charge most of its members by their exact age from August 1, forcing members in their 50s and 60s to pay a price closer to the true cost of their medical care.

A 62-year-old couple with a RegularCare policy, which covers 80 per cent of health expenses, will pay an extra $884 a year or $73.72 a month.

About 640,000 of the insurer's 800,000 members will pay higher premiums, ranging from 6 per cent more for a 38-year-old to up to 72 per cent more for about 250,000 members aged 50 to 64.

A premium rate chart supplied by Southern Cross shows prices starting to go up from the age of 30 for hospital care policies and from 42 for hospital and specialist cover.

But the insurer, which last year increased premiums up to 30 per cent for its members aged over 45, would not say yesterday how much it was increasing premiums overall.

Chief operating officer Mike Ashby conceded it was comparable to the 16 per cent increase predicted by the board in February but said the overall figure was irrelevant, as individual rises differed so widely.

Until now, Southern Cross has charged premiums across broad age bands of 0-18, 19-45, 46-64 (introduced only last year) and 65-plus.

Under the new system, all policyholders aged 19 to 64 will be charged by their age, creating a huge increase in premiums for older members.

Mr Ashby said Southern Cross had to increase premiums sharply through the new age bands because last year members over 50 had cost it $27 million more in claims and administration than they paid in premiums.

Southern Cross had avoided making losses over the past four years only through its income on other investments. But this year it would record its first loss for several years.

He said the company did not want older members to leave, but perhaps they should look at cheaper, less comprehensive policies to see if they offered better value for money.

Consumers Institute chief executive David Russell said he was glad to see Southern Cross coming round to this point of view, as the institute had been recommending it for years.

Many older people would be better off with cheaper policies that paid for essentials such as hospital care but not day-to-day medical spending such as doctors' bills.

Grey Power president John Jefferson predicted that many policyholders would quit rather than pay the higher premiums.