Calls for government to force insurers to drop health premiums

Health insurers are paying considerably less for medical equipment, so why are prices rising?

Health premiums should decline

The Medical Technology Association of Australia (MTAA) has called for the government to force private health insurers to drop premiums this year as national participation rates continue to decline.

MTAA chief executive Ian Burgess said more than two million Australians had dumped their private health insurance in the past five years and Tuesday’s figures from the Australian Prudential Regulation Authority (APRA) confirm the trend is continuing, with only 44 per cent of Australians now covered.

At the same time, the APRA data shows private health insurance profits before tax increased 14 per cent over the past 12 months, from $1.6 billion to $1.8 billion.

This is despite the price of medical devices paid by private health insurers dropping by up to 38 per cent in the past three years due to government reforms, including another round of price cuts on 1 February 2020 for technology treating heart and lung disease, diabetes, bone cancer, severe arthritis and eye trauma.

“It’s clear private health insurers would rather drop customers than drop their prices and profits,” Mr Burgess said. 

“Private health insurance premiums have grown faster than national house prices over the past decade.

“It’s a safe bet that the first private health insurer whose premium (rises) go below zero will increase their market share overnight.

“Surely that’s a better investment than health funds spending more on marketing to squabble over fewer customers?

“Private health insurers haven’t paid one extra cent for medical devices over the past two premium years, despite raising premiums twice (the rate of) inflation.

“The number of Australians dropping out of private health insurance is quickly snowballing into an avalanche and it’s time for the government to step in and save private health from itself.”

Health insurance premiums will increase by an average of 2.92 per cent on 1 April 2020, which will mean that many policyholders will be asked to pay an average of $103.40 extra for the same level of cover.

To receive an independent obligation-free quote for your health insurance visit healthinsurancecomparison.com.au.

Have you reached a tipping point with your private health cover? Do you believe the annual prices rises are justified?

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COMMENTS

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Rosy
20th Feb 2020
9:57am
Research has shown to be useful when shopping for new Health Insurance, some Insurers are owned by overseas companies, some not for profit, some owned by the members etc... Although changing to a new one is daunting, in my case it has saved me hundreds of dollars. It was very much worth the inconvenience.
johnp
20th Feb 2020
12:03pm
Rosy. Can you advise which or at least some of the insurers that are in each category. That is overseas companies, not for profit, owned by the members etc
Anonymous
20th Feb 2020
4:02pm
I agree with john, maybe this website should be used to suggest good insurance companies, if there are any, where premiums will be lower but with similar adequate cover.
johnp
25th Feb 2020
3:09pm
seeing as no-one here or at YLC seems to know which are the lowest cost insurance companies. Or capable of doing some sort of comparison maybe we should all just refer to Choice magazine. !!

20th Feb 2020
10:12am
Health insurance is a scam. This rapacious industry has killed the goose that laid the golden egg: people, understandably, are leaving in droves.
Retiring Well
20th Feb 2020
2:16pm
As long as you don't get on one of those public hospital waiting lists.
Just Cruising
20th Feb 2020
10:36am
My premiums going up by 6.6% and have always consistently been significantly higher than inflation. If you have any shares in any of the big private health insurers I suggest you bail out.
KB
20th Feb 2020
10:54am
All you can do is to change health insurance providers closer to the time. Do not go wit the big ones. Even if you save $ 5.00 is worth it if you are pensioner. I used my health insurance quite bit last year due to serious illness and would no go without It is time t health insurers sopped asking an increase in premiums.
Mariner
20th Feb 2020
11:07am
I can accept reasonable increases, the procedures in hospital are certainly different to what they were only 15 years ago. If all of us would be part of the system without being able to opt out, the costs overall would be cheaper. I grew up in a system where we all had to have health insurance by law, maybe the reason I am not against the industry as much as people who are used to get everything for free on Medicare.
In my neighborhood we do have waiting lists and very long ones for certain operations like cataract removals. Some mates are paying $3000 per eye in cash to escape the 3 year wait. We have good public facilities but they just cannot cope with all these pensioners wanting treatment.
KB
20th Feb 2020
10:54am
All you can do is to change health insurance providers closer to the time. Do not go wit the big ones. Even if you save $ 5.00 is worth it if you are pensioner. I used my health insurance quite bit last year due to serious illness and would no go without It is time t health insurers sopped asking an increase in premiums.
Tanker
20th Feb 2020
10:55am
Don't expect this government to take any action. Look at the time it took to get the Royal Commission into banking. Morrison said 27 times it wasn't need. How good is his word?
Tanker
20th Feb 2020
10:55am
Don't expect this government to take any action. Look at the time it took to get the Royal Commission into banking. Morrison said 27 times it wasn't need. How good is his word?
Mariner
20th Feb 2020
10:57am
Without all these insurance increases we could possibly live without the part pension. Our combined insurance bill is about $7000 per annum (health insurance is the biggest, followed by body corp, consisting mostly of insurance premiums since we have no lifts or pool). The Govt sold our Insurance Provider, Medibank, and now they will want to make a profit. Buying it back is not possible. At our age we cannot afford to get out of Private Health.
floss
20th Feb 2020
11:24am
Lower prices under a Liberal Government you must be joking it is not in their make up.All the Libs will ever do is sell all we own to overseas companies that charge as much as they can and when that fails just move on.While having a medical check up a week ago i was told i was silly to be in a health fund as they are just a rip off.
sanity
20th Feb 2020
11:27am
Private Health Insurance should only be offered via a not for profit organisation.
Public company's paying dividends to shareholders (after profit taken from private individuals) who increase premiums for "any" reason, should be barred from providing this service.
Rosy
20th Feb 2020
11:36am
True!!
Anonymous
20th Feb 2020
4:07pm
Agree, sanity, however the horses bolted a long time ago!

All one can ask for now is a Royal Commission into this rip-off industry where there are many gaps while insurance also keeps going up. The Govt also encourages those gaps by keeping their contributions low, and allowing medical specialists to charge uncontrolled levels of fees. This industry is based on a completely ridiculous concept!
sanity
20th Feb 2020
7:00pm
People who take out insurance have the choice.
DO NOT take out cover from Public Company's.
Individuals can chose.
sanity
20th Feb 2020
7:00pm
People who take out insurance have the choice.
DO NOT take out cover from Public Company's.
Individuals can chose.
sanity
20th Feb 2020
11:27am
Private Health Insurance should only be offered via a not for profit organisation.
Public company's paying dividends to shareholders (after profit taken from private individuals) who increase premiums for "any" reason, should be barred from providing this service.
Horace Cope
20th Feb 2020
11:28am
"Have you reached a tipping point with your private health cover? Do you believe the annual prices rises are justified?"

Short answer to reaching the tipping point is no but it may not be too far off.

I don't believe that the annual increases are justified because there is no transparency in the actual cost to the consumer. For years we have been told that the increases are necessary and average just over/under 4%. Firstly the percentage quoted is well above inflation and secondly, and most importantly, the actual increase is always well above the quoted average. The worst we have found is that the average quoted was 4.32% and our increase was 13.81%.

When the health insurers put their case to the government they should be made to show the rate increases for each group of consumers. Showing the average is false and misleading and bears little to no relationship as to what is actually being charged to individual consumers.
Rosy
20th Feb 2020
11:35am
Absolutely correct Horace Cope!
Anonymous
20th Feb 2020
4:11pm
Agree Horace, I have never seen increases less than the "average" as published. This year, instead of 2.92%, I was advised it would be 6.4% increase! The Govt should instead cap the increases to a Maximum, not average, with exceeding inflation being an exception rather than the rule.

On another point, the MTAA seems to have stuffed up big as per the article above, by announcing major price reductions AFTER the insurance industry has already announced their price increases. The Govt should have obtained the MTAA commitment BEFORE approving any increases.
Jem
20th Feb 2020
11:46am
I have a Pal that had a funny turn and had to call an ambulance who immediately took him into a public Hospital in the City for a quadruple by pass, after a week they moved him into a flashy Private Hospital with all the bells and whistles, to recoup...was told the Public system policy is to do this as they need the beds in the Public Hospital...He has no private health...
On relating this story to my GP, was told the Public System is far more efficient in dealing with ones emergencies such as this....and Private Health is really unnecessary if you only worry about life threatening incidents and procedures.......
Oldchick
20th Feb 2020
4:42pm
Not sure I can entirely agree. Sure, I’ve heard similar stories but I’ve also seen the opposite side. I have friends who have been on waiting lists for over 12 months, for shoulder, knee and hip pain. One even collapsed from the pain and was admitted to hospital for pain management but still waiting for the op months later. Young people are dropping out of health insurance but then join the public system for sporting injuries, maternity, or if their children are unlucky enough to get really ill, then they go on Facebook and set up a GoFund Me page because they have no private cover. Unless the Government does something both the Private and public systems will suffer even more. The public system is already so overloaded, inefficient and ramping is at a critical level. It’s expensive but I’ll be keeping my cover.
older&wiser
20th Feb 2020
12:16pm
Well that's a bit of a joke. If they did drop premiums, they would then drop covers.
GeorgeG
20th Feb 2020
12:28pm
I belong to a not for profit insurer. Premium increases are some of the lowest. Those that answer to shareholders will obviously squeeze customers harder.
Surely the whole system needs to be looked at, because with an ageing population, a tipping point is close.
One example of needed reform. There was a hue and cry a while back about specialist costs. It would appear nothing has been done there?
KSS
20th Feb 2020
1:04pm
This is not just an issue about insurance companies (who are of course just like any other business with a responsibilty to shareholders), it is also about all the other businesses that operate alongside such as hospitals, specialists, MRI machines, scanners, prosthetics, medical inserts, drugs, needles and stitches etc al, of which has to be paid for. And these do cost more when the claim is being put through an insurance company in much the same way as having your car repaired under your car insurance frequently costs more than just getting the job done. People see overcharging insurance companies as victimless and an opportunity to make a bit on top.

The truth is, it is not victimless because we all pay with higher premiums.

Health insurance as part of the entire health sector, not insurance in isolation, needs to be re-evaluated and redesigned not just rearranged like deckchairs on the Titanic.

Having said that, we also need to re-evaluate our expectations of medical care and services e.g. neo-natal services spend millions keeping a severely compromised neo-nate alive, or spending further multi-millions on keeping an elderly, seriously sick person with little quality of life alive with no real outcome for anyone, or we all expect and want the latest equipment, drug, therapy, operation technique for ourselves or our families etc. If we want these actions to continue, then we have to be prepared to pay the price one way or another.
Rosy
20th Feb 2020
4:52pm
HCF is non for profit, BUPA is owned by a company in the UK, with Medicare- Reciprocal Health Care Agreements (RHCA) are in place with the United Kingdom, Sweden, the Netherlands, Belgium, Finland, Norway, Slovenia, Malta, Italy, Republic of Ireland and New Zealand, which entitles visitors from these countries limited access to public health care in Australia and eligible Australians to reciprocal rights while in one of these countries.
Rosy
20th Feb 2020
4:55pm
I use RT Health for a smaller fee than I was paying for HCF for the same cover however, one needs to have had a family member who is, or has worked in the Railway or other transport industry.
skinner
20th Feb 2020
9:12pm
Instead of paying high Health Insurance premiums, how about saving & banking the money, for when it may be needed to cover any health concerns. We got out of HI years ago after the birth of our second daughter. We have 'free' hospitals here so if money is required for 'private care' & it is deemed necessary, we'd find a way to pay for any treatment!
Mariner
20th Feb 2020
9:24pm
If you can manage to hide the money you are on a winner. Pensioners saving money in a dedicated health account are deemed. Certainly the way to go if still in your working cycle.
skinner
20th Feb 2020
9:12pm
Instead of paying high Health Insurance premiums, how about saving & banking the money, for when it may be needed to cover any health concerns. We got out of HI years ago after the birth of our second daughter. We have 'free' hospitals here so if money is required for 'private care' & it is deemed necessary, we'd find a way to pay for any treatment!