Health Insurance Premiums Set to Rise:

Fact Checked
Updated 09/01/2024
Health Insurance Premiums Set to Rise:

Shop around to avoid shockingly high health cover premiums in 2024.

Time to read : 4 Minutes

Each year, the government and the industry engage in negotiations regarding our health cover premium increases. This year, the industry's request for an average 6% premium increase was turned down. It's the largest premium increase request in the past six years.

Health Minister Mark Butler cited cost-of-living pressures as the reason for rejecting the request:

“I’ve written to every private health insurer, directing them to have another go and put forward a more reasonable figure that considers their years of record profits and the declining proportion of premiums they return to customers, particularly while household budgets are under pressure.”

Health insurance premiums increased by 2.9 per cent last year and 2.7 per cent in 2021 and 2022.

The industry claims the rises are necessary to cover inflation and our “soaring use of hospital services”. (I just have to add this; in a pandemic? As Lleyton Hewitt would say: come on!)

Private Healthcare Australia chief executive Dr Rachel David said the request for such a big increase reflected inflation, record claims and essential IT costs such as upgrades to protect against data hacks.

Dr David said the 6% increase compared well to other insurance increases such as home and car insurance, which jumped 14%.

So…health cover is the same as my general insurance?

I don’t know about you, but I have a much higher priority for my physical health than I do for my car cover. I doubt I’m unique here.

Also, my car cover costs a lot less than my health insurance premium. (The car insurance doesn’t cover my kid either, of course. She’s too young to drive but not to be healthy.)

Our AMA speaks up:

The private health sector is also facing criticism from the Australian Medical Association (AMA).

The AMA’s Private Insurance Report dropped last week, revealing that private health insurers earned $1.3 billion more than two years ago, and returned fewer rebates and less money to their members.

The report claims the proportion of hospital insurance policy premiums returned to patients in the form of insurance benefits for hospital treatment fell from 88.02% in 2018-19 to 81.6% in 2022-23.

Considering covid-19 took out 2019-21, a 6.4% reduction in benefits is a pretty major difference.

AMA president Professor Steve Robson said the report showed us that there’s a good case for comparing funds - after all, if the government can knock your health cover’s premium increase back, so can you:

“Our report card highlights the importance for consumers to look closely at their options, as the benefits can vary dramatically between insurers for the same product.”

Robson called on the federal government to insist that more of the money we pay out in premiums delivers better healthcare benefits for health fund members, rather than boosting the coffers of insurance companies.

“We believe there should be a mandated minimum amount that every insurer is required to return to patient care and will continue to fight to improve the value for money that consumers receive from their private health insurance,” he said.

The Department of Health and Aged Care and the Australian Prudential Regulation Authority (APRA) assess the application for price changes each year, and then pass on their recommendations to the minister who has the final say on the proposals.

The bottom line:

The health insurance industry asked for a 6% premium hike this year.

The federal health minister said no.

The industry’s argument equates health cover with general insurances.

The AMA report indicates we’re not getting as much back from our funds as we did before the pandemic.

The AMA’s suggestion is that we should be shopping around more for our health cover.