Medical and hospital costs have almost trebled in the past 20 years, according to a new report from Fidelity International that tracks living costs since the turn of the century.
With private health insurance set to rise again within weeks, ramping up the stress on annual budgets, the data shows why more and more households are struggling.
Living cost indexes (LCI) are published quarterly by the Australian Bureau of Statistics (ABS) and track a typical basket of goods and services. The reports usually show small increases – rarely drops – but when viewed over a longer timeframe, the key pressure points are stark.
The Reserve Bank of Australia (RBA) calculates that a ‘typical basket of goods and services’ valued at $200 in 2000 had soared by 61 per cent to $322 by the end of last year. The average annual inflation rate during that time was 2.5 per cent.
The Fidelity International report found that medical and hospital costs rose 195 per cent between 2000 and 2019, housing rose 94 per cent and essential living costs 62 per cent. Discretionary spending, such as on international travel, entertainment and clothes, had dropped.
Chris Powell, managing director of Integrity Life insurance, told The Age and the Sydney Morning Herald the hike meant many households were trying to cut corners to save money by forgoing emergency protection products such as health, life and total and permanent disability insurance.
He said the price of insurance generally had jumped about 118 per cent and that 45 per cent of Australians said they did not have insurance in place to meet the cost of a personal disaster.
“The overall rising cost of living means they are less likely to have the very products, such as health insurance, that can help to pay those bills,” Mr Powell said.
And with private health insurance costs to rise by an average 2.92 per cent from 1 April – and by as much as 5.6 per cent – there is no relief in sight.
In YourLifeChoices’ 2019 Retirement Matters Survey, the almost 5000 respondents were asked what were the biggest drains on their savings. Almost 53 per cent said healthcare was a major problem.
In the December 2019 quarter, the ABS reported that the living costs of pensioner and beneficiary households rose 0.7 per cent. Over the same period, the living costs of other government transfer recipient households rose 0.9 per cent, age pensioner and self-funded retiree households rose 0.5 per cent and employee households rose 0.4 per cent.
The most significant price rises in the December 2019 quarter were tobacco (+8.4 per cent), domestic holidays, travel and accommodation (+7.3 per cent), automotive fuel (+4.4 per cent) and fruit (+6.8 per cent).
The most significant price falls were international holidays, travel and accommodation (-2.9 per cent) and women’s garments (-2.5 per cent).
ABS chief economist Bruce Hockman said: “Drought conditions are impacting prices for a range of food products. Food prices increased 1.3 per cent this quarter with price rises for beef and veal (+2.9 per cent), pork (+4.7 per cent), milk (+1.7 per cent) and cheese (+2.4 per cent). Both the impact from the drought and lower seasonal supply contributed to price rises for fruit (+6.8 per cent) this quarter.
“Annual inflation remains subdued partly due to some price falls for housing-related expenses. Through the year to the December 2019 quarter, price falls were recorded for utilities (-1.0 per cent) and new dwelling purchases by owner-occupiers (-0.1 per cent), while rent price rises remained modest (+0.2 per cent).”
Does the data trend over 20 years explain why your income is not stretching as far as it once did?
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