A new analysis has revealed Australian families with private health insurance could see their premiums rise by an average of $141 this year, while retirees could see an average increase of $167, after the Federal Government announced an average rise of 2.9% for policyholders.
However, the peak body for the national health insurance sector says Australian health funds have delivered a premium increase well below inflation, citing the cost of medical devices as a key driver in rising premiums.
The new data by financial marketplace and advice company Compare Club comes less than six months since the majority of health fund members were hit with premium increases between October 2022 and January 2023.
According to Compare Club, most couples and families, after this increase, will be paying around $300 more than what they were paying in September 2022. Implementation dates of the increase will vary by fund, with some funds sticking to the traditional April 1st date, and others delaying to later in the year.
The organisation’s modelling for 2023’s premium increases reveals that Australians with health insurance could be facing a large hike in the cost of the policies when taking two rate rises into account. It found:
- Couples over 65 could see an increase in premiums of more than $300 per year (over two rate rise)
- Young families could see an increase of up to $270 per year (over two rate rises)
- Retired couples could see their average premium rise to over $5,900 a year
Compare Club CEO Mr Andrew Davis said that people should pay close attention to any communication from their fund, as they may be hit with even higher increases.
“When you look at each fund’s increases, some are way above the government’s average. HBF, for example, is putting up premiums by an average of 4.49%, while some other funds are increasing by over 3.5%,” he said.
“Some policy holders may get lucky and will sit at the lower end of the price hikes but for plenty of households, this will be a second rise in six months.”
Davis said even policyholders who are seeing premium rises deferred to later in the year will still be paying a lot more for their cover than this time in 2022, and the amount they stand to save from a deferral is likely to be less than what they would save by reviewing and switching their policy.
“We didn’t see many people switch when rates went up in October last year, perhaps because customers were focused on mortgage increases and other cost of living pressure, but we anticipate a flurry of people who’ll be kicked into action by the second price hike and wanting to review their policies in March, which is always the peak month for customers to review their health cover,” he said.
Why private health insurance is costing more
Private Healthcare Australian CEO Dr Rachel David said Australian health funds had delivered a premium increase below inflation.
“Recognising the impact of escalating cost of living pressures on Australian families and growing demand for private health insurance, health funds are doing all they can to keep premium increases as close to zero as possible,” she said.
“The rising costs of recruitment, power and food have hit hospitals hard, and keeping hospital care sustainable without pushing up premium costs for households has become a major challenge.
“As inflation and cost of living expenses increase so too does the cost of healthcare, putting upward pressure on premiums, and with government-sanctioned overpricing continuing in some areas of healthcare, it is increasingly difficult to keep costs down.”
David said the largest factor currently increasing premiums for Australian families was the inflated price of generic medical devices, with Australians paying more than people in countries like New Zealand, the UK, France and South Africa for commonly used generic medical devices.
“Reform is happening to reduce medical device prices in line with the market, but it is occurring at a glacial pace while people are struggling,” she said.
“PHA is calling on the Albanese Government to immediately cease the over-pricing of medical devices for the private sector and bring costs in line with the public sector, then commission the ACCC to review a better way forward to prioritise consumer interests,” she said.
“The review should be conducted independently by the ACCC, which sits outside the usual health sector interests and lobbyists, and can provide the government with reliable data and economic analysis as to why the present pricing arrangement for generic medical devices must change and consumers put first.”
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