Apr 05, 2023

Rising private health insurance premiums increase cost of living pressures

Rising private health insurance premiums increase cost of living pressures

The cost of private health insurance has increased, adding to the everyday expenses more than 14 million Australians face, although some are set to get a reprieve as not all health funds will pass on the rise.

Private health insurance premiums rose by 2.9% on April 1, a figure on par with the last four rate rises but below the 4.4% 10-year average.

According to Compare the Market, single policyholders should expect an annual increase of $60 while families will have to pay around $134 more per year.

There is good news for a select few as big-name providers such as Medibank, Bupa, HCF and NIB will delay increases until later in the year due to cost of living pressures. 

Nurses and Midwives Health, the only industry-specific private health fund for nurses, will postpone premium increases until July 1, although they are yet to announce what interest rate rise will be passed on. Parent company, Teacher’s Health, has increased premiums by 2.5%.

The Reserve Bank of Australia’s (RBA) decision to pause interest rate hikes for mortgage holders, it’s a slight piece of good news for many Aussies. 

But others will be slugged by above-average rate hikes, said CHOICE senior campaigner, Dean Price.

“This year’s premium price hike will be tough for many consumers given the current cost of living pressures,” Mr Price said.

“The average increase may be lower than other years but people should check how much their specific policy has gone up as it will vary. Some funds had average increases of up to 5.38%.

“People can shop around and lock in a price if they pre-pay before April 1 each year, but that is only a short-term solution to the long-term challenges in the market.”

CBHS Corporate Health is one of the smaller providers passing on a whopping 5.38% increase in premiums, while HBF, Cessnock, ACA and Australian Unity customers will also see big premium rises. 

At the other end of the scale, Health Care Insurance will actually reduce premiums by 0.09%, Police Health will make no change, while Union Health and AIA are passing on increases of less than 1%.

If you’re unsure of what your own premium increase is, check your emails or call your private health provider as they should have already provided an update on policy changes.

The Minister for Health and Aged Care, Mark Butler, said premium rises – which have to be approved by his Department – reflect value for money.

“Private Health Insurers must ensure their members are getting value for their money and when costs rise they want to know higher premiums are contributing to system-wide improvements, like higher wages for nurses and other health workers,” Minister Butler said.

“All Australians deserve access to affordable treatments and the devices they need to stay healthy and live full and productive lives.

 “Our Government supports people who hold private health insurance with around $6.9 billion through the private health insurance rebate each year.”

Private health insurance rebates will also remain the same as the lower-than-usual premium increase was not enough to impact the Government’s contribution.

Premium rebates are typically cut if there is a big difference between the premium increase and the rate of inflation.

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