Afterpay putting bite on insurers
MILLENNIALS are turning to buy-now-pay-later juggernaut Afterpay to cover dental costs as they shun private health insurance, creating headaches for the industry and government.
The new economic disruption raises serious issues for the multibillion-dollar private health insurance sector, which needs healthier, younger people to sign up to reduce the overall premium costs.
But Afterpay's expanded service into dental care has also opened it up to questions about loading youth with debt.
An inquiry into payday lenders will take evidence in Brisbane today with Afterpay bosses, chief executive officer Nick Molnar and executive chairman Anthony Eisen, to give evidence.
An Afterpay submission to the inquiry stated: "We know that Millennials have one of the lowest participation rates in private health, and general dental is not covered by Medicare.
"Our first partnership with Primary Dental has proven extremely popular, with thousands of patients opting to pay via the new method since its launch."
Oxley MP Milton Dick, who has rallied against payday lenders that target low-income households which struggle to obtain loans from regulated banks, said Afterpay's expansion raised two policy issues.
"The latest information shows that healthcare costs are now exploding in Australia and becoming out of reach for most young people,'' Mr Dick told The Courier-Mail.
"With record numbers dropping out of private health insurance it's clear that people are now turning to buy-now-pay-later schemes for basic health costs.
"With no government regulation in place for these payment schemes, this is nothing but a recipe for young people to become trapped early in a debt spiral.
"The thought that Queenslanders could get trapped in a debt cycle just paying for basic healthcare costs horrifies me.
"It's time the Morrison Government realised that there is a growing problem and self-regulation (for payday lenders) simply does not work. We only need to look at the banks to see where that has ended."
Would you use Afterpay for a medical procedure, rather than health insurance?
He said he feared thousands of young Queenslanders could become trapped in a lifetime of debt because of such schemes.
"These schemes were once for people wanting a new pair shoes or luxury home items, but new trends show that even basic healthcare costs is now the new norm."
It comes as Afterpay continues to lure younger Australians who have turned their back on credit cards or are finding it harder to obtain more than one.