Private health premiums to rise in 2020: Here’s how it will affect you

The Morrison government announced over the weekend that health insurance premiums are set to increase in the coming year.

Health Minister Greg Hunt confirmed on Saturday that he had approved a 2.92 per cent increase in prices to take effect in April 2020, which will be the smallest increase in private health insurance premiums in two decades.

“This is the smallest change since 2001 and significantly lower than the 3.8 per cent inflation rate for medical and hospital services this year,” he said.  “The Morrison Government is delivering the most significant reforms to private health insurance in over a decade, which is making private health insurance simpler to understand and more affordable for Australians.

“Our reforms to private health insurance include discounts for young people, better access for people in the regional areas, easier to understand classification system for policies, better access to mental health and price reductions for medical devices.”

From April 1 2020, a single person will pay an average of 68 cents extra per week and a family will pay $1.99 more a week. However, depending on your insurer, changes may vary slightly.

“Each insurer may pass on a varied rate increase per product that can be either above or below the average 2.92 per cent, so it’s important consumers keep an eye out for communication from their insurer on what the exact premium increase for their policy will be,” health expert Anthony Fleming from Compare the Market explained.

Insurers should have this information available for consumers in late January 2020.

“It is crucial to review what increases are being applied ahead of April 1 to see how health premiums could be impacted,” Fleming added.

However, while the rate rise announcement is not the largest increase in recent years, it contributes to a five-year average increase of 4.11 per cent, he explained.

“Policyholders are likely to feel the pinch, and should review other policies in the market to make sure they’re getting the most value for their lifestyle and circumstances.”

By April 1, all insurers will also be required to categorise their hospital products into Gold, Silver, Bronze and Basic tiers.

“This move aims to help consumers see which hospital treatments and services are covered within these four tiers.

“To help mitigate the cost of health insurance, consumers should check they are paying for what they need, at a price they can afford. For example, those in the later stages of life may no longer need cover for obstetrics or IVF, and could save by seeking out a policy that better suits their lifestyle.”

It comes just months after the Grattan Institute declared the sector had become “riddled with inconsistencies and perverse incentives.”

The report, released in July, said people are increasingly dissatisfied with private health insurance and warned that an increasing number of younger Aussies are opting to cancel or forgo private cover, which could lead to further issues.

Experts warned that the sector faces a “death spiral” if young and healthy people continue to ditch their cover, leaving only older Australians – who tend to have more complex and expensive health needs – accessing health insurance, driving up the cost of premiums in turn due to increased pressure on the system.

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