Another year, another rise in private health insurance premiums
The 3.95% increase is the lowest increase in 17 years. At twice the rate of inflation, that's not saying much.
Australians continue to balk at private health insurance premiums, which will rise by an average of 3.95% this year.
This marks more than a decade in which premiums outpaced the rate of inflation by at least a factor of two each year. The 3.95% increase is the lowest rate of increase in 17 years, but Aussies who hold private health insurance policies are feeling the cumulative burden and saying enough is enough.
According to a new finder.com.au survey, a staggering 48% say it’s time to review their policies and make financially opportune changes if necessary. While most will simply look for a better deal elsewhere, a significant number of others are feeling the pressure to downgrade their protection by ditching private cover altogether or by offloading their extras cover.
Historical data from the Australian Private Hospitals Association shows that the percentage of Australians holding private cover decreased between 2015-2016 after years of steady growth. On top of that, a higher and higher percentage of these private policies have become exclusionary in nature (ie people are opting for cheaper policies that don’t cover everything). Exclusionary policies accounted for just north of 15% of all private cover in 2010. By 2016, it was nearly 40%.
The forward-looking survey from finder.com.au suggests these trends could continue.
This trend toward exclusionary and cancelled policies is a major contributor to rate hikes. When people trim their policies, they end up paying less into the benefits pool. To make up the shortfall, insurance companies need to increase premiums, causing customers to once again question their policies’ value.
It’s a vicious cycle that is especially problematic in light of Australia’s demographics. Australia has an ageing population who will be placing a larger and larger burden on the private health care system as time goes on. Meanwhile, younger generations aren’t stepping in to ease the burden.
According to finder.com.au, Gen X, Gen Y and Gen Z are more willing than Boomers to take a hatchet to their policies when faced with extravagant premium increases.
The Australian Senate launched an inquiry into rising private health insurance premiums, issuing their report in late 2017. It offers a series of recommendations aimed at easing the pressure on premiums and offering better value to consumers.
Major themes within their recommendations include making private health care policies (including benefits, limitations and policy changes) easier to understand for consumers; requiring transparency within the industry around fees, commissions, rebates, costs and executive remuneration; and regulating anti-competitive behaviour within the industry.
For consumers who can’t wait for the government to take action on these recommendations, there are still ways to save on private health insurance.
The best thing you can do is to review your policy to make sure it is still meeting your needs. Maybe you’ll find you can scale back without having to forego important cover. For example, if your children are grown, you may find you no longer need the extra cover for major dental work like braces and wisdom teeth.
It also pays to shop around. You may be able to locate a similar policy at a cheaper rate. Or you can always negotiate with your current provider if you want to keep any loyalty benefits you may have accumulated.
Compare your health insurance options today