Private health insurers have raised premiums on some policies by more than quadruple the approved average, says Choice

Private health insurers have raised premiums on some policies by more than quadruple the approved average, says Choice
  • PublishedMay 25, 2024

Multiple private health insurance funds have raised premium prices by as much as five times the approved annual increase for certain policies, according to consumer advocacy group Choice. 

The government approved a 3.03 per cent average annual increase in health insurance premiums earlier this year, which took effect on April 1. 

Choice found, in many cases, Australians with private health insurance were paying “substantially more” than the advertised 3.03 per cent price increases.

Insurers had previously requested an increase of up to 6 per cent, which Health Minister Mark Butler rejected on public interest grounds.

Mr Butler said the industry’s initial bids were unreasonable given their “record profits” and the context of cost-of-living pressures. 

The highest increase, of more than 17 per cent, was Australian Unity’s Gold Complete Hospital with $750 excess in Western Australia, according to Choice. 

“Of the over 24,400 hospital and combined hospital and extras policies in our database, only 29 policies had an increase of exactly 3.03 per cent,” said Choice’s health insurance expert Uta Mihm.

“[This] means that many Australians are now paying substantially higher monthly costs for their health insurance.” 

One in seven households have struggled to pay their health insurance, according to research by comparison site Finder.

The average cost of private health insurance was around $160 per month for a single person, or $1,920 a year.

Finder’s latest survey found an estimated 354,000 Australians cancelled their health cover, while about 590,000 others switched to a different provider. 

Even among providers advertising lower than average 3.03 per cent price increase, including HCF — 2.89 per cent, the lowest of the big health funds — prices of some individual policies have increased significantly. 

HCF’s Hospital Gold police with $250 excess increased by 15 per cent, according to Choice.

The 15 per cent rise was also true for HBF Gold policyholders, while the fund’s average increase was 3.95 per cent.  

However, Finder’s insurance expert Tim Bennett told the ABC: “That is how an average works. 

“Every set policy has a different set of premiums in terms of how much it costs to actually cover offer coverage for those sort of treatments. 

“It’s a lot more expensive to provide cover for gold policies, and the reason is two-fold.

“The first reason is … we have an aging population and we especially have an aging customer base for private health insurance. 

“The second reason is because the kind of more complicated treatments that exist on gold policies are more expensive. 

“We’re getting better at doing joint replacements, we’re getting [new ways] to make pregnancy and childbirth a better experiences. Weight loss surgery is another one that’s getting more and more complex, but as a result, more expensive.

“The reason there’s more people who are older keeping private health insurance is primarily, frankly, cost of living … people will drop it if it ends up being too expensive. 

“It is a bit of an Ouroboros, a snake eating its own tail.

“It’s certainly a vicious cycle, because as health insurance, gets more expensive, more young people get priced out … and then as older people have more complex health needs, it gets more expensive, and the cycle starts again.” 

Private Healthcare Australia’s chief executive Rachel David said providers were trying to reflect rising costs of healthcare, noting premium increases were “a long way below expectations” amid the rate of inflation. 

“We’re grappling with inflation the same as very other part of the economy,” she said. 

“So hospitals have had to factor in greatly increased costs for recruitment, wages, power and food. To be able to offer value for money, we have to be able to cover those costs and so the premium increase was absolutely necessary this year.

“The process of determining those prices is incredibly rigorous. 

“The submissions get made to the Australian Prudential Regulation Authority first, then to the Department of Health, and then they go through everything, from claims … to management expenses and operating expenses before they approve an increase. 

“And this time some funds were asked to submit up to three times to actually satisfy the regulators that everything they were asking for was fair.”


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