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Dementia helping to fuel the private insurance premium surge

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Private health insurance premiums continuing to outpace inflation tell two stories: treatments keep rising in cost; we’re using those treatments more as the population ages. PHI critics, such as me, tend to overlook the impact of the latter.

Nowhere is that aging impact more obvious than in the elevation of dementia to the status of the biggest single cause of death for Australian women. It’s second overall, thanks to men’s predilection for heart disease, but that’s changing fast. On the trends recorded by the Australian Bureau of Statistics, men will be joining women soon enough.

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The rise of dementia as our primary killer is itself testimony to the success (and expense) of our health system in prolonging lives, but we all still have to die of something and the longer we live, the more likely that “something” will be dementia.

And that’s expensive. The median age for dementia-cased death, including Alzheimer’s, was 88.8 years in 2016. The median age for ischaemic heart diseases is 85.1.

Dementia is now the biggest single cause of death for Australian women. Dementia is now the biggest single cause of death for Australian women. Photo: Louie Douvis

Our ability to keep alive long enough to get dementia and then continue to keep them alive means there is an increasing need for care for years before death. Alzheimer’s Australia estimates people with dementia will cost the nation $14 billion this year, with 244 new cases presenting daily.  The present cost includes dementia sufferers receiving high levels of care in nursing homes, but also 10 per cent who are receiving no care at all.

The Alzheimer’s Australia report by the University of Canberra’s National Centre for Social and Economic Modelling (NATSEM) reckons costs will more than double to $36 billion in less than 40 years, if nothing is done, with Australia needing more than 250,000 paid workers in residential aged care and 525,000 carers in the community for the 1.1 million of us likely to have dementia.

The dementia elephant in the aged care zoo is sharing an enclosure with the general mental health costs whale. Mental illness claims are whacking income support insurers as well as health insurers.

The way insurance basically works is by spreading risk – those the accident doesn’t happen to, those who don’t get sick, those whose house doesn’t burn down, subsidise those who have those things happen to them. The lower the chance of the insured risk happening to you and the more expensive the insurance, the less willing you are to pay the premium.

It understandable that young, healthy people to baulk at paying high premiums that go to old people who are in the process of dying, one way or another.

Some of our health system’s rorts can be fixed – the gauging of Australians by purveyors of medical devices (our new valves, hips and knees), the over-servicing specialists, the unnecessary rules enforced by the more militant doctors’ unions, some of the pharmaceutical windfalls – but the big costs of an aging population remain.

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