Experts say private health price rise cannot be justified

Call for price hike to be delayed until April 2021.

health insurance forms

Experts have slammed private health insurance companies raising premiums from 1 October.

Yuting Zhang, professor of health economics at the University of Melbourne, says the justifications for the rise in prices – delayed by six months due to COVID-19 – “don’t stack up”.

“At a time when many policy-holders are facing financial stress and many elective surgeries or treatments suspended or delayed, this week’s price rise isn’t justified. With a further price rise already set for April 2021, it would be fairer to delay any fee hike until then,” she wrote in The Conversation.

Prof. Zhang says hospital and healthcare costs paid by private insurers have “reduced substantially” in 2020, claims have been decreasing and increases in chronic disease do not have to be covered before next year.

“Health fund premiums have risen by 61 per cent over the past decade,” Alan Kirkland, chief executive of consumer advocate CHOICE, told Nine. “The justification is that the amount insurers pay out to cover your treatment is going up. But that doesn't hold up this year.”

A Grattan Institute report revealed that private health insurance consumers were getting less value for their money because of out-of-pocket costs.

Australian Prudential Regulation Authority (APRA) figures show that in the year to June, 56,000 Australians aged between 20 and 49 dumped their cover.

Then the pandemic struck and access was denied to elective surgeries and benefits such as physiotherapy and optical services, further reducing how much people could get out of their insurance.

Furthermore, the pandemic showed the strength of the health system, CHOICE health campaigner Dean Price told ABC News. So, people feel less need to invest in private health insurance.

“The national response to COVID-19 has shown what happens when people are treated on the basis of medical need alone; public and private hospitals working together can meet the health needs of all Australians,” he said.

Premium rises were already outstripping static wages before the pandemic restrictions cost many policy-holders their jobs.

Premiums were set to increase on 1 April, on average, by 2.92 per cent, though some increases were as high as 5.6 per cent.

HBF and TUH have both cancelled their 2020 premium increases entirely, while small funds Onemedifund and have deferred the price rise until 1 January.

Australian Medical Association (AMA) president Omar Khorshid says Australia’s private health insurance system is struggling.

“This is only likely to get worse as a result of the global pandemic as people face unemployment or underemployment, and the economy is in recession.”

He said young people were dropping their insurance and more people over the age of 65 were taking it up.

But Dr Khorshid warned that as more older Australians take up private health insurance and the claims increase, the premium rises also inflate.

This would price younger Australians and families out of the market.

“Unless the drift away from private health insurance is stopped, we will see even more pressure on an already stressed public hospital system,” Dr Khorshid told Seven News.

“It is time for more reform, it is time for the government to stop underfunding the public and private health systems, time to stop making ‘savings’ at the expense of quality healthcare, and time to focus on fixing the system.”

Seven reports that the AMA is calling for the establishment of an independent body to regulate the industry and oversee premium rebate reforms, lifetime health cover loadings, the Medicare surcharge levy, youth discounts, long-term incentives for people to maintain their cover, and a minimum level of benefits for patients.

Some funds are giving premium reductions or price freezes for people accessing JobSeeker or JobKeeper payments, advises. It suggests you check with your fund for the details of their hardship support.

Can you afford the premium price rises? Will you ditch your private health insurance?

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    Horace Cope
    29th Sep 2020
    "Can you afford the premium price rises? Will you ditch your private health insurance?"

    Yes, we can afford the rise in our health insurance although some minor adjustments will need to be made in our spending. We are at an age where the mind is willing but the body is weak and we don't look forward to standing in a queue for what would be classed as elective surgery. A recent visit to the optometrist disclosed a need for cataract surgery and there is a waiting list in the public hospital system but my private health insurance allows me to have it done when it suits me, not the government. The eye surgeon that is recommended also accepts the health fund's payment so there will be no outlay.
    29th Sep 2020
    "Furthermore, the pandemic showed the strength of the health system, CHOICE health campaigner Dean Price told ABC News. "

    You would have to disagree with this statement. Surgeries and clinics were cancelled, emergency departments have seen huge drops in traffic particularly the weekend warriors and kids sporting injuries, to the extent they are concerned that serious conditions are not being diagnosed. The fact that there are fewer people presenting at hospital does NOT determine the strength if the system at all. Perhaps one good thing to come out of it is that people with minor illnesses did not show up and did not suffer for it. Lesson learned I hope when the health system is back to something approaching normal.

    In terms of my insurance, I had already paid in advance for this year so was already paying last year's rate. However, my insurance was cancelled by the fund because they did not reach agreements with hospitals and specialists. I was uninsured whilst this debarcle carried on for two months. Then they sent a letter saying the policy had been reinstated! Fine but NO refund for the lost cover. Then recently I got another letter with the increased premium from 1 October! Is it any wonder people are losing faith with health insurance?
    29th Sep 2020
    And one more thing, if you had elected top cover without pregnancy, fertility inclusions, you can no longer exclude these things. And that means things you may consider needing such as hip replacements may also be excluded on the lower level cover. You really need to take the time to read the policies before you buy (assuming you will) to make sure you really are covered for things you think you are especially if you just automatically renew.
    29th Sep 2020
    KSS, you are right about the stupidity of lumping pregnancy & weight loss surgery with joint replacement. Over the years, funds have been sneakily moving procedures up to a higher level. Soon you will need top level for an ingrown toe nail.
    Already I have been caught with a procedure that was covered previously on a lower level, but then moved to a higher level (and more expensive). Their excuse was that I should have read the small print when renewal came around.
    29th Sep 2020
    Surely lumping pregnancy in with an over 60 insurance is a corrupt practice and should be reported to the ACCC.
    29th Sep 2020
    Triss in some policies it is even worse with fertility treatments and IVF covered but not the successful result i.e. pregnancy!
    Baby Huey
    29th Sep 2020
    at our age and health ststus can and have to have private health insurance. We do not mind reasonable rises. What concerns us is the excessive gaps being charged by specialists and the apparent move to day surgery much of which is not covered by private insurance. Emergency departments in private hospitals are generally contracted out. Even if you are admitted or reamitted the emergency departments can charge what they want and you only get the medicare rebate. Last year, while receiving chemo for cancer, I had a bad reaction which required an ambulance to the private hospital emergency department. The doctor did a quick examination, called my treating specialist, and readmitted me to the ward. We were charged almost $600 which was not covered by insurance. My specialist later advised me to in future have the ambulance take me to the nearby public hospital and the specialist would arrange transfer to the private hospital where I was fully covered with no gaps.
    29th Sep 2020
    Before I file the annual fee update letter, I mark the envelope " Up goes the fee propaganda." year after year... never "Down goes the....
    29th Sep 2020
    I have mentioned this before but say it again - the Federal Government PHI rebate for people 70+ is currently 33.4% compared with 40% in 2012. This substantial reduction, coupled with annual rises in the PHI premiums, continues to make private health insurance less affordable every year, especially for those on single aged pension.
    So folks, it's time to write letters to Federal Health Minister, Hon. Greg Hunt.
    29th Sep 2020
    It’s about time for the government to drop the “Hon”. After the colossal scandal over Aged Care Homes, Protection of Children, Aboriginal Affairs, and almost every other ministerial portfolio there’s nothing honourable about our ministers.
    29th Sep 2020
    Yes well it was Labor that started the withdrawal of the rebate!
    29th Sep 2020
    Even before the CV-19 crisis, the federal government was bereft of any long term strategy to fund hospital care. Droves of people continue to leave the funds, partly because in absolute terms, the premiums are too high, and partly due to huge gaps even if families were on premium plans. The premium rises will accelerate the situation. A long term goal should make high quality public hospital care the default option, with the wealthy small minority taking private care if they wish. Costly? Yes, but that's what taxes are for. The team care available in public hospitals is a better guarantee of quality than the lone ranger care in private.
    29th Sep 2020
    I haven’t claimed as much on my health cover as in previous years, due to COVD, so don’t believe a price rise is warranted this year.

    If anything, they should let the 12 month ceiling on claimed amounts carry over to next year because people haven’t been able to use them this year.
    29th Sep 2020
    Here we go with blame the ageing again:
    But Dr Khorshid warned that as more older Australians take up private health insurance and the claims increase, the premium rises also inflate.

    This would price younger Australians and families out of the market.
    29th Sep 2020
    All tax payers contribute to Medicare, which is supposed to provide a universal public health insurance scheme. Medicare was introduced in 1984 to provide free or subsidized treatment by health professionals such as doctors, specialists and optometrists. Private Health Insurance was introduced to give people choice and help get another level of funding from the public to support the health system and take the pressure off it.
    When we talk about not getting the services we take private health insurance to cover, we should remember it is the Australian government that banned non-urgent elective surgery, to free up beds and staff for COVID, but still paid the private hospitals, so it left members of private health insurance paying for service they could not access. This was another form of contribution to health costs by the public.
    No doubt we are going to see the outbursts from those who blame Private Health Increases on we elder Australians and while there is no doubt that the aging population contributes to health-care costs, it’s the emergence of costly new drugs, diagnostics, medical technologies and high-priced specialists that really drive the escalating costs. And the government does little to control these costs.
    We have politicians who refuse to control the fees specialists can charge, and the massive fees paid to pharmaceutical companies and privately owned hospitals and other health care services, maybe because they are their friends from the wealthy end of town.
    Many people are unaware that it is the government who tells private health insurers what fees are to be charged, when to raise fees and has forced them to adopt the supposed simplification of private hospital cover into the tiers of Gold, Silver, Bronze or Basic. This has disadvantaged the insured, but benefitted the private hospitals.
    That said, we still have a great health system, not quite as good as our neighbors in NZ where the politicians did not sell their souls to the wealthy specialists, foreign investors in hospitals and pharmaceutical companies, but still good.
    A 'healthy' health system, is fundamental to our national and personal-wellbeing and to the country's prosperity. Unfortunately, ‘some greedy specialists’, tend to drive costs up, especially the gap element. This continues to be a bone of contention for everyone involved in the Health system, but successive Governments have failed to address this issue. Many of the top specialists work less than half a year and spend the rest travelling to exotic places. Some are still doing this while the rest of us can't travel, but with approvals from the same government departments that say no to the rest of us!
    29th Sep 2020
    Thanks ozjames70: what a great analysis. Why don't radio and TV interviewers put these issues to Hunt and Morrison, and make sure they don't evade proper answers?
    29th Sep 2020
    ozjames70 you conveniently leave out that public hos[itals benefit considerably through private patients being treated in public hospitals. Not to mention the strong-arm tactics by public hospitals on private health insurance holders to use that insurance even when it is not necessary! Don't think for one minute that it is just private hospitals benefitting from health insurance, but it isn't.
    30th Sep 2020
    Now that funds have to 'simplify' their levels, I am so sick and tired of funds lumping totally unwarranted procedures all in together. Now that I am of senior vintage, PHI is useless if it doesn't look towards my possible needs, so I ensure any fund level covers for joint replacement. (NOT just joint investigation as some funds state). But now to get this, all funds have joint replacements only in their top level. And this top level always includes totally useless procedures - well, at least for my age demographic - of pregnancy, IVF, weight loss surgery, assisted reproduction, etc.
    Yes, their are some funds that exclude the unwanted junk, but for some reason they are also the most expensive. Can't quite understand - perhaps a little bit of discrimination? Provide less cover, but charge more - aimed specifically at a certain age group?

    What I DO find ironic - less petrol is being consumed and used, so prices have dived. But the opposite is happening with Health Insurance. Less procedures being done, funds raking in the money by not providing services, yet prices still rising. No wonder people are finding PHI on the nose.

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