So, we now know how much our health insurance premiums will be going up by, on average 3.03 per cent. It could have been worse, though. Federal health minister Mark Butler knocked back a request for a 6 per cent increase over Christmas.
However, it’s still a price increase, on top of increases to car and home insurance premiums. And for many retirees, it stretches budgets even further.
HCI has the lowest average increase at 0.27 per cent and CBHS Corporate is the highest at 5.82 per cent. According to calculations by Kate Browne, head of research at financial comparison website Compare Club, this means the average increase for a couple over 65 could be anywhere between $16 to $340 if you hold combined cover, while anybody on a singles policy could be looking at between $8 and $169.
And of course, these are just averages. Last year, we heard stories of people facing a 10 per cent rise, which would add a whopping $585 to the average couples policy and $290 to a singles policy.
The health funds will claim that the increase is necessary in order to deliver value for money for their members. But does this claim stack up?
Is the 2024 premium increase justified?
There is some justification behind the health funds’ claims, especially when it comes to claims. Last December, the Australian Institute of Health and Welfare released figures that showed nearly 1 in 10 patients were waiting longer than a year to be admitted for elective surgery.
That’s partly down to the COVID-19 pandemic, where elective surgeries were put on hold, sending waiting times up.
And while elective surgery is theoretically non-essential, for many older Australians, their quality of life worsens when waiting for surgery. This is especially true for procedures such as joint replacements or cataracts.
One trend the Private Health Insurers Intermediaries Association noted last year was that there was an unusual spike in over-65s taking out health insurance for the first time or returning after cancelling. This suggests that many of us view the cost of health cover as a price worth paying if it means we get treated quicker.
But more elective surgeries mean more claims to health insurers. The more claims a health insurer faces, the less overall money they have to play with, and inflation means some elective surgeries that have been delayed by waiting lists will cost more today than they did a year or even six months ago.
But it’s been well reported that health insurers made a lot of money during the pandemic as they collected premiums from us while not having to pay out for surgeries or even some extras. The Australian Prudential Regulation Authority (APRA) estimated the industry’s net profit increased by 110 per cent during COVID. And while many insurers have since returned around $3.5 billion to policyholders, they’re not exactly strapped for cash.
Out-of-pocket costs on the rise?
Earlier this week, YourLifeChoices reported that the average out-of-pocket repayment was $410.67 – an increase of 10.2 per cent year on year, with over-50s claiming the most benefits. And that can rise to $680 for knee replacements, before you include the cost of accommodation, theatre and medical devices.
This gives weight to the health funds’ claims that they need to keep up with the cost of inflation. A 10.2 per cent rise in out-of-pocket expenses isn’t good for either the fund or the customer. It means we’re paying even more on top of our premiums, and that’s only going to lead to dissatisfaction with the health funds. And while the funds are, generally, in pretty good financial health, they don’t want to be losing vast sums of money.
It’s also worth remembering the funds aren’t the only businesses wanting your money. They have to negotiate agreements with private hospitals, and there are frequently disagreements between the two parties.
Last year, HCF and Healthscope – which operates a number of private hospitals across Australia, including Sydney’s Northern Beaches – had a dispute that lasted several months as the two parties disagreed on costs. The year before, Bupa had a similar dispute with Ramsay Hospitals. In both cases, the funds felt their members weren’t being offered a fair deal. It’s another example of where costs for health funds rise.
It’s also the over-50s who are most likely to claim and funds want to have a delicate balance between being able to give members value for money and making money.
Are you getting value for money?
Ultimately, whatever the funds say, the best person to decide if it’s justified is you.
Given that couples over 65 tend to pay an average of $5847 for health insurance and singles $2896, you’re the best judge as to whether this gives you value for money or not. In some cases, the additional care and service, plus the fact the fund has an agreement with your local hospital and other health providers, make it worthwhile.
Given your premium increase details should land in your inbox or post box soon, you’ll have to make the call. You’ll have to decide if you think your fund is being reasonable or taking you for a ride. The good news is, with over 30 funds in the market, there’s a great chance of finding better value.
How much is your policy going up by in 2024? Do you think the increase is justified? Let us know in the comments section below.
Also read: Most complained about health insurance funds
My health fund NIB have knocked back a number of claims and one I had to take to the Ombudsman and after 18 months, they agreed to pay it. It was a meagre $200 for iron infusion that they said was not covered. Othe funds paid it but not NIB. I now pay $142 a fortnight and more than half of the benefits I never use as a male. I looked at changing my NIB plan I have had for 23 years but I then lose benefits of no excess and no co-payment for hospital. and some other benefits. NIB are spending millions on TV advertising for new members and offering 10 weeks free to new members but increasing fees to existing loyal members. Existing new members are not getting the benefits but fees increase. They increase fees but close down the only office we had in Brisbane so all communication is with Newcastle by phone, post or email. How can they justify increasing fees and not having even one shopfront for customer service in Queensland.
I am a 63 year customer of a fund and my wife isa 59 year customer.
She is now terminally I’ll in an age care facility.
Only one ambulance claim in 4 years for her and there will be no more claims of any sort.
I guess it’s out of loyalty that still continue to pay our family membership rather than revert to single.
I believe the Health funds should be using their market power in the pricing of artificial hips knees etc.
Insiders tell me the overseas manufacturers are just ripping us off.
Cheers