Those with private health insurance will soon have to fork out more for their cover, following a government announcement that premiums are set to be hiked up by 3.25 per cent next year.
The increase, which the Coalition is touting as “the lowest private health insurance premium change in 18 years”, will come into effect from April 1, 2019.
Announcing the news on Wednesday, Health Minister Greg Hunt said the increase was “significantly lower than the 4.1 per cent inflation for medical and hospital services this year”.
And while that may be the case, the rise will see customers paying out more for their cover, with the premium rise estimated to cost a family an extra $135 a year and $62 more a year for singles. But it is older Australians who stand to be hit the hardest, according to Courier Mail estimates they will be paying out an extra $150 a year on average for their cover.
The rise will affect an estimated 13 million Australians who have private health insurance, provided by 37 private health insurance funds across the country. It was also revealed that, despite premiums rising, providers are spending more than ever for healthcare for their members.
In a double blow to consumers, the government subsidy for private health insurance premiums is also set to fall from 30 per cent to 25 per cent at the start of April.
Jenny Williams, from Compare the Market, said: “Today’s announcement may be the lowest since 2001 but many consumers will still need to fork out an additional $131.30 for the same level of cover. Also, with the once 30 percent rebate predicted to fall below 25 percent come April 1, this is a double blow for millions of consumers who rely on the rebate to subsidise the cost of their health cover.”
Over the year to September 2018, benefits paid by health funds on behalf of their members increased by 3.62 per cent to reach a record $20.4 billion.
Private Healthcare Australia Chief Executive Dr Rachel David said: “No-one likes a premium increase, but it is necessary to ensure health funds remain financially viable, meet statutory prudential requirements and most importantly, continue to be in a position to provide members with access to quality healthcare”.
Last month it was revealed that more and more Aussies were choosing to get rid of their private health insurance policies, or downgrading to cheaper products.
The ACCC’s annual report into the private health insurance market found an increasing number of Australians were dropping their hospital cover in favour of just extras cover. Many are also opting for policies with higher excess payments as a way of keeping policy premiums to a minimum.
“People are increasingly feeling the pinch of private health premium increases and growing gap payments,” ACCC Deputy Chair Delia Rickard said in a statement. “In response, many are shifting to cheaper products with reduced coverage, and some are dropping their cover altogether.”
The rise also comes after the federal government announced reforms to private health insurance, with all products set to move to gold, silver, bronze and basic product categories by 2020. The transition period starts in April, 2019. The aim is to make private health insurance easier to understand and more affordable for consumers.
The new tiered health insurance system will separate 70,000 private health policies to make it easier for Australians to understand what they’re getting from their health cover, and help them figure out how to get more bang for their buck.
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