With private health insurance premiums set to rise at more than three times the rate of inflation, over half a million angry Australians are planning to dump their cover.
As of 1 April, private health insurance will, on average, set families back an extra $200 per year, with singles’ premiums to cost $100 more per year, after Health Minister Sussan Ley’s approval on 2 March of a 5.59 per cent premium increase.
Such a price hike will mean that the cost of having private health cover will, for the first time on record, outweigh the annual cost of petrol. The cost of fuel has long been the third-biggest expense for families after their mortgage or rent, and groceries, but the increase in premiums could see health insurance take the number three spot.
Most private health funds will increase by the minimum 5.59 per cent, but other products, including those from Bupa and Medibank, will rise by 8.5 to 9.5 per cent.
A Galaxy poll conducted on behalf of health fund comparison site iSelect found that around half of all health fund holders will now shop around for a better deal in response to the price hike. Around 530,000 Australians plan to dump their health cover altogether.
“It’s possible these households have already pared back their cover as premiums have risen in recent years but this latest increase may be the tipping point that means they can simply no longer afford it,” said iSelect spokeswoman Laura Crowden.
Deputy Leader of the Opposition Tanya Plibersek believes that the rise in health insurance premiums that could see many Australians drop their private cover doesn’t have to happen, and claims that Sussan Ley has the power to stop these increases.
“The health minister does have the power to reject increases and the government needs to consider what happens to people who have private health insurance when it becomes unaffordable,” said Ms Plibersek.
It is also feared that a massive private health cover exodus will put added pressure on the public health system.
Around two million Aussies will stick with their current health fund plan, possibly because they are unaware that there is no waiting period should they decide to switch to equivalent or lower health cover.
“It’s worrying that only 46 per cent of policy holders correctly understand that waiting periods are protected,” added Ms Crowden. “This could mean that many Australians are simply putting up with ongoing price increases instead of switching to a better deal with a different insurer because they wrongly believe they will have to re-serve waiting periods.”
“Most Australians do not realise that any waiting periods already served will be protected by law if switching to an equivalent or lower level of hospital cover,” said Ms Crowden.
Earlier this month, the Australian Medical Association (AMA) released a guide to help people choose a better health fund. Of the 22 most common hospital procedures, health fund HBF had the highest benefit payouts, with many smaller funds coming a close second. The nation’s two largest health fund providers, Medibank and NIB, did not provide the best payout for any of the top 22 procedures.
Read more at The Daily Telegraph
Private health insurance is already an expense many cannot afford, but for those who can, the question now may be: is it still worth the cost?
I did some quick sums this morning and found that, over the last 15 years, as a couple, we have paid somewhere between $36,000 and $40,000 for our health cover. We have never had to use our fund for any emergency or hospital service, touch wood, and any procedure we have undergone has either had to be paid for up front or has gone through Medicare. All I have to show for my money is a few pairs of spectacles and a free dental check here or there.
Now, in itself, having health insurance is exactly that – insurance. I understand that there may be a day when it will be required. I, along with many Australians, worry that the day I drop it will be the day I need it.
But when the premiums continually rise year in year out, that age-old argument of “would I be better off if I had just saved that money instead” comes into play.
We are lucky to have a public health system that is the envy of many other countries. But that system is also reliant on the many people who have private health insurance. What happens when half a million Australians dump their private health cover and take a punt on public? Well, a health system that is already stretching to cope with the demands of an ageing population and the increase of those living in poverty who have no choice but to use it, as well as the sustained and savage cuts in Government funding, will no longer be so effective.
Maybe all those people dumping their health cover will send a message to private health insurers, as well as the Government, to put a halt on the seemingly never-ending increases in premiums. Otherwise we may all soon be reliant on a public health system that is already under pressure.
Whilst it may not be the best idea to dump your health cover entirely, in the meantime, the best option for many may be to hunt around for a better deal, finding a health package that covers you for the necessities at your stage of life.
What do you think? Do you feel that the cost of private health insurance is becoming unaffordable? Would you choose health cover over being able to fuel your car? Is there something the Government can do to minimise the incessant premium increases which are more than double the current rate of inflation?