A healthy proposition

By Susan Edmunds

Medical insurers are waging a battle for your premiums.

Benji Marshall.
Benji Marshall.

New Zealand health insurers are offering cheap policies designed to tempt young people - but there are concerns that they may not be cost-effective in the long run.

New insurer nib and Southern Cross now offer policies that cover part of the cost of things such as GP visits and dentist checks - but not major health costs such as surgery.

Prices start from $4.95 a week, or about $260 a year, for nib's Basic EveryDay package, which pays 60 per cent of the cost of glasses, contact lenses, dental care, physiotherapy and GP consultations. People can claim a maximum of $950 a year.

The policies have been promoted heavily in advertisements fronted by league convert Benji Marshall. About 75 per cent of people aged 20 to 39 don't have health insurance.

A competing package from Southern Cross, Health Essentials, pays 75 per cent of GP, dental, optometrist, physio, dietician, acupuncture and osteopath costs, for $1 a day for those aged under 35 and $1.50 for anyone older.

Chief executive Peter Tynan said it was designed to appeal to young people who would not normally think about getting health insurance.

They would be particularly interested in things such as physiotherapy and osteopath cover, he said.

For a 30-year-old woman, nib's Ultimate Health package costs about twice as much as the Basic EveryDay offer, but covers up to $300,000-a-year in surgery and $200,000 in medical cover.

Insurance industry analyst Russell Hutchinson said the cheap policies were a good option for people who were worried about their budgets.

"If you're worried about $60 for the GP, it's easier if it's only $40."

He said health insurance policies used to cover things such as GPs as well as surgical costs but, over time, the full plans had become the most expensive on the market.

"This is getting back to offering some cheap health cover. But nib and Southern Cross will need to work hard to move clients from very basic cover to more comprehensive cover, before the client's health means it's too expensive or no longer possible," Hutchinson said.

Tynan said 1500 Southern Cross customers upgraded their policy every month.

He said it was common for customers to start on a basic policy, upgrade and then downgrade again when it became more expensive. And having something was better than having no cover at all.

There are now 60,000 fewer people with health insurance than there were in December 2008.

The December 2013 quarter reported the first quarterly increase in the number of insured since 2009.

For that quarter, health insurers paid out $242 million in claims, up 5.2 per cent on the December 2012 quarter.

Claims paid for the 12 months ending December 31 last year were $943 million, up 7.7 per cent on the year before.

- Herald on Sunday

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