Health insurance may cost 20% of your income in the future
The average family policy currently costs $392 per month but could skyrocket to $2,354 by 2051.
Health insurance affordability is an ongoing issue for many Australians and new research from finder.com.au says that it may get even worse.
On 25 January 2018, Minister Greg Hunt announced health insurance premiums would be going up by an industry average of 3.95%. While the price hike was the smallest in 17 years, it was higher than expected and means that premiums have risen by an industry average of 5.42% every year since 2010. Over the same period, wages have only grown by an average of 2.86% each year.
Currently, the average Australian family has a disposable household income of $4,455 each month, with the average health insurance policy costing $392 per month. This means that the average family is spending about 8.8% of their disposable income on health cover.
However, if premiums continue to outpace wage growth at its current rate, health insurance premiums will account for over 10% of a family's disposable income as early as 2023 and 20.2% by 2051. That would mean you're spending a whopping $2,354 per month on health insurance.
An affordability crisis for health insurance
While the price rise in 2018 is the lowest yearly increase since 2001, more needs to be done to combat the growing unaffordability of health insurance. APRA data released on 13 February found that the health insurance industry lost over 21,000 members year-on-year for the December quarter 2017.
Last year the government announced a raft of reforms coming into effect from as early as October 2017, geared towards reducing the cost of private health insurance. The measures include simplified product categories, increased maximum excesses, discounts for 18 to 29 year olds, the removal of coverage for some natural therapies and a reduction in benefits payable for items listed on the Prostheses List.
Compare your health insurance options today
- 7 health insurance deals to save you money at tax time
- Is 130,000 Velocity points worth changing your health insurance for?
- Medical expenses up 8.3% – how can you avoid being stung?
- Earn over $90K? You could save $900+ in tax with basic private health cover
- Health insurance costs rise from April 1: 5 ways to save