MILLENIAL & GEN Z AUSSIES and HEALTH INSURANCE

WHY THEY’RE PAYING TOO MUCH & WHO’s REALLY CASHING IN

by ADAM MARTIN, Independent Candidate for Braddon

If you’re a Millennial (1980-1994) or Gen Z (1995-2012) in Australia, you’ve probably wondered if private health insurance is worth it. With premiums climbing and coverage shrinking, it’s no surprise many younger Aussies feel like they’re getting a raw deal. Unfortunately, the current system benefits everyone except those footing the bill. But why are we stuck with a system that keeps getting worse? And why do both major political parties seem happy to keep it going? Let’s dive in and unravel this mess.

Private health insurance in Australia is supposed to ease the load on our public health system by offering faster access to surgeries and specialist care for those who can pay. But here’s the rub: year after year, premiums have skyrocketed, leaving policyholders paying more for less. Over the past twenty years, premiums have increased by an even greater percentage than inflation (2.5%), averaging 5-6% annually—while wage growth has barely budged. This is a recipe for disaster for young Aussies, whose wages already lag behind the cost of living.

Now, let’s say you’re considering private health cover. Even with it, you’ll likely face “out-of-pocket” expenses. Private health insurers have tacked on excess payments and exclusions, meaning you still have to shell out even after paying your monthly premium. What’s more, many insurers have started excluding common procedures like knee reconstructions, hip replacements, or certain eye surgeries to name but a few. In other words, you’re paying top dollar for insurance that may not even cover you for what you need.

If you’re under 31, you may have heard about the Lifetime Health Cover loading, a penalty designed to nudge younger people into private health insurance. If you don’t take out cover by 31, every year you wait adds a 2% penalty to your premiums, up to a maximum of 70%. While the idea is to encourage young, healthy people to sign up, it’s just another way the system gets people to pay for something they don’t necessarily want or need.

Young Aussies end up in a bind. Many are already struggling with rent, student debt, and rising living costs, and private health insurance can feel like another burden. But the system penalises you if you wait, putting even more pressure on those already battling tight budgets.

So, if young Aussies are paying through the nose, who’s cashing in? The biggest winners are the private health insurers and, by extension, their shareholders. The government currently spends about $7.5 billion a year subsidising private health insurance through rebates, which essentially goes straight to private companies. In theory, this subsidy is supposed to keep premiums affordable, but insurers still hike prices almost every year.

Private health insurance is also heavily regulated. Every year, insurers need government approval to raise premiums, but it’s become routine to green-light these increases. The outcome? Insurers keep making profits, while you’re left footing a higher bill for less coverage. The way the system is set up, insurers get their profits, shareholders get their dividends, and Australians—especially younger ones—are stuck paying more without any meaningful benefits.

Now, you might be wondering why the government doesn’t just scrap the private insurance rebate and pump that money into Medicare. After all, $7.5 billion would go a long way in funding our public hospitals, reducing emergency wait times, and making healthcare accessible for everyone. But both major political parties seem to shy away from tackling this issue head-on. Why? It’s simple: political caution and the influence of powerful interests.

Firstly, private health insurers have significant lobbying power. They argue that private health takes the pressure off the public system, so we “need” it to keep Medicare sustainable. This argument, while debatable, resonates with policymakers who fear a public system that might struggle to keep up without private health. In other words, private insurers have convinced the government that they’re an essential piece of the healthcare puzzle—when, in reality, it’s just a profitable business model that’s hard to break.

Secondly, politicians don’t want to risk a fight with an industry that’s deeply embedded in our healthcare system. In 2016, a “Medi-scare” campaign falsely claimed that Medicare was going to be privatised. The backlash was intense and, since then, politicians have been wary of messing with healthcare policy. Both major parties know that changes to health policy can be politically explosive, so they avoid making bold moves—even when it’s clear the system isn’t working for most Australians.

The private health system is often advertised as giving Aussies more “choice” and “flexibility,” but for Millennials and Gen Z, it’s clear that the choices are limited, and the flexibility is a myth. When half of all Australians are essentially forced into private health to avoid extra tax and penalties, you must ask if it’s really about choice at all.

For young Australians, private health insurance feels more like a tax disguised as a product. In fact, most young people who buy basic private insurance are only doing so to avoid the Medicare surcharge or Lifetime Health Cover loading—not because they think it’s actually useful. And that speaks volumes about how broken the system really is. When people buy insurance solely to avoid being penalised, not because it offers genuine value, it’s clear we’re stuck in a cycle that’s helping insurers and no one else.

So, what would a fairer system look like for Millennials and Gen Z? For starters, Australia could reduce the subsidies that currently prop up private insurers and invest that money back into Medicare. Improving public healthcare would mean people don’t feel pressured into private insurance to access timely care. Instead of chipping away at Medicare, we could boost its capacity, hire more doctors, and ensure more bulk-billing GPs so people don’t have to pay out-of-pocket for basic healthcare.

Another solution is to address the rules around the Lifetime Health Cover loading and the Medicare levy surcharge, which currently penalises people for not buying private insurance. By scrapping these financial penalties, the government could give young Australians genuine choices rather than coercing them into private health insurance they don’t want. A well-funded public health system could stand on its own without needing private health insurance as a crutch.

It’s clear that Australia’s current health insurance system isn’t working for Millennials and Gen Z. As the cost of living rises, younger Australians are being asked to shoulder an ever-growing financial burden in a system that offers little in return. If we want a fairer healthcare system, we need to recognise that the private health model isn’t working and start looking at how we can invest more in Medicare to support everyone equally.

The sad reality is that unless there’s serious political will, the major parties will continue supporting a system that primarily benefits insurers and leaves the rest of us paying the price. But young Australians have power, too. We’re the generation that will shape future policy, and by calling out the failures of the current system, we can push for a healthcare model that values people over profits.

In the meantime, if you’re on the fence about private health insurance, consider your options carefully. Look at the coverage, read the fine print, and weigh up whether it’s truly worth the cost—or if you’re better off sticking with Medicare. And as we look ahead to the next election, remember real change in healthcare won’t come from the status quo. It’ll come from demanding leaders who prioritise public health and deliver on a system that works for everyone.