On Friday Health Minister Greg Hunt announced that the Government had approved private health insurance premium increases of up to almost five per cent. With the average increase being 4.84 per cent, this is the lowest in 10 years, but will still result in premiums jumping by up to $200 per year.
At 3.3 times the rate of inflation in 2016, there are genuine concerns that private health insurance is becoming a luxury many Australians can’t afford.
“I realise cost of living pressures are a major concern for Australian families. Although this is the lowest increase in a decade, I am determined that more can be done to get better value for families,” said Mr Hunt. “As the new Health Minister, I will work with insurers over the next year to find ways insurers can deliver more value for customers without compromising on the quality of cover.”
Customers can find the details of their health fund increases by visiting Health.gov.au
The reasons cited for the increases include, labour costs, advanced technology, an ageing and ailing population and public hospitals encouraging patients to allow them to claim costs from health insurers.
Since 2009, premiums have increased by 54.6 per cent, although the consumer price saw an increase of only 19 per cent over the same period. Compounding the problem is the reduction of the private health insurance rebate that has steadily decreased since June 2013, as a result of the Lifetime Health Cover loading being excluded.
“This latest increase means private health insurance customers have been hit with a 54.6% cumulative price hike since 2009, forcing many to downgrade or drop their private health insurance,” says CHOICE head of media Tom Godfrey.
“Notwithstanding the barrage of fear-laden advertising from health insurers and for-profit switching sites, private cover is unaffordable and often unnecessary for many consumers.”
With the increases in mind, CHOICE last month introduced its DoINeedHealthInsurance.com.au, to help consumers evaluate their individual need for private health insurance.
If you’re looking to reduce your health insurance premiums, CHOICE suggests:
- consider increasing your excess to reduce your premium
- see if your health fund offers discounts for paying by direct debit
- ask yourself if you really need extras cover: if the amount you claim is lower than your premium, consider dropping it
- check to see if you can join a restricted membership health fun.
- pay your annual premium in March to put off the 1 April price hike until next year
- take the Do I Need Health Insurance? health check to see if there’s any tax benefit in paying for hospital cover.
Read more at CHOICE.com.au
Each year health insurers provide a plethora of data to the Health Minister to justify slogging customers with premium increases that far outweigh the rate of inflation. And year after year the Health Minister seemingly just signs on the dotted line.
This year, we’ve been told that we should be thankful the increases were not higher and that the cost reduction of hip and knee replacements and some prostheses are the reason. But what are the numbers that justify such an increase?
Health insurers have cited increased costs of procedures, more people using health services, advances in technology and even that public hospitals are encouraging patients to allow them to claim from health funds for services provided. Even our ageing population is blamed. Yet, I doubt if anywhere in the documentation provided to the Health Minister is the need to cover the increasing salaries and shareholder returns.
Medibank Private’s annual report states that the salary of its former chief executive rose from $1.4 million to $2.4 million in 2016, while NIB’s chief executive saw his total salary increase by 95 per cent to $1.76 million.
The premium increases, approximately $2 per week for singles and $4 for families come at a time when satisfaction with health insurers has taken a hit, with many Australians, 15 per cent according to a Finder.com.au survey, considering cancelling their health insurance. A Roy Morgan survey last year also found that overall satisfaction with health insurers had dropped from 76.3 per cent in 2015 to 74.4 per cent in 2016.
Perhaps it’s time to heed the words of the Prime Minster and seriously consider whether private health insurance is worth the premium. Speaking on 3AW on Friday, Mr Turnbull said, “My counsel would be that people should stay in private health insurance but obviously people have got to make their own decisions.
“At a time when household budgets are tight every additional cost hurts, there’s no question about that.
What do you think? Have you, or are you planning to cancel your health insurance due to cost or dissatisfaction with your provider? Should the Health Minister do more to keep the premium increases to a minimum? Should health insurers be more accountable by making public the figures used to justify their claims for premium increases?