‘Circular game’: Ross Greenwood warns of risks of increasing private health premiums

Sky News Business Editor Ross Greenwood has warned that an increase in private health premiums could cause a “circular game” where premiums continue to rise as younger people “start to drop out”. Private health premiums will rise 3.03 per cent from April 1, the biggest increase in five years, though well below inflation. The increases go through after approval from Health Minister Mark Butler. “Any big insurance industry is a big pool, and the reality is the people that drop out first are those people who are feeling the mortgage pain – they’re the younger people,” Mr Greenwood told Sky News host Peta Credlin. “But the younger people claim less than the older people, and so what happens is you add more risk to the pool if the younger people start to drop out. “The increases right now are not as great as what they were … but the real issue that happened then could happen now – people start to drop out, it increases the risk in the pool; if the people start to drop out, the pool has a greater risk, the premiums keep going up, and therefore more people drop out. “That is a circular game you don’t want any health insurance company to have to face.”