Health fund premiums will get average weighted increases of 3.95% from April, the federal health minister, Greg Hunt, has announced. The rise will mean the average family pays an extra $143 for private health insurance in one year.
On Thursday Hunt said it was the lowest premium increase since 2001 and that last year’s reforms to prostheses pricing had helped to keep premiums down. Prior to the reforms, health funds had been paying out benefits for medical devices and prostheses at a rate up to five times higher than prices charged for the same products in the public system.
“Every single dollar of savings from the $1.1bn reform of the prostheses list is being passed on to consumers and this has already resulted in this lower premium change this year,” Hunt said.
Single people with private health insurance will pay an average of $73 more in one year following the premium increases.
But the opposition leader, Bill Shorten, told reporters the government should not be “running around saying they’ve had some marvellous win because our health insurance premiums will go up just under 4% this year”.
“For Australians who’ve got historic low wage rises, this is another kick in the guts,” he said. “Inflation’s barely at 2%. Wages are moving at 2%.”
Centre for Policy Development research fellow Ian McAuley, who has undertaken extensive research into the private health insurance industry, said he did not think the government had done enough to attract people to private health insurance or to discourage them from scrapping their policies.
“You won’t see this sort of capping of premium rises every year from now on,” McAuley said. “What the government has done is target all of the low-hanging fruit such as prostheses pricing in order to keep premiums from increasing too much this year. But they are one-off savings measures that can’t be replicated every year.”
He said consumers were already cutting back on discretionary spending and that any premium increase, no matter how small, would be tough. “I’m not too excited by this announcement,” McAuley said.
But Hunt said private health insurance was an “essential part” of the health system.
“There are 37 private health insurance funds operating in Australia and I encourage consumers to shop around to get the best deal for themselves and their families,” he said.
Premiums have increased by an average of 5.6% every year since 2010.
In response to Hunt’s announcement insurers announced their premium increases. Medibank will raise premiums by an average 3.88 % and NIB by 3.93%. HCF announced an average premium increase of 3.39%.
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