Key Points
- Health Minister Mark Butler has announced the annual private health insurance premium increase for 2024.
- He said the average premium rise is still less than annual wage and inflation increases.
- Private health provider NIB has defended hikes above the federal figure, citing the increased cost of doing business.
Private health insurance premiums are set to increase for the 14.7 million Australians currently covered.
Health Minister Mark Butler announced the biggest hike in three years on Tuesday morning, with changes coming into effect on 1 April.
Butler said the rise in private health insurance was below the annual rise in wages.
“I wasn’t prepared to just tick and flick the claims of health insurers, as the Opposition asked me to do,” he said.
“I asked insurers to go back and sharpen their pencils and put forward a more reasonable offer for the 15 million Australians with private health insurance.”
So, how much will private health insurance rise and how can you soften the cost-of-living hit?
By how much are private health insurance premiums increasing?
The federal government has approved an average industry premium rise of 3.03 per cent.
The increase in 2024 is slightly higher than the rise of 2.9 per cent in 2023 and 2.7 per cent in 2022 and 2021.
Canstar health insurance expert Steve Mickenbecker said the rise was significantly lower than in the pre-COVID period, when premiums went up between 4.5 to 6 per cent each year.
He explained that premiums remained lower during COVID because fewer elective surgeries went ahead as these have now resumed.
What is the main reason health insurance premiums are increasing?
Put simply, Mickenbecker said the cost of providing health care has gone up.
“We’ve had inflation running at 4 per cent, so it’s not surprising that the costs of doing business and supplies have gone up … insurers have to put their premiums up,” he said.
The insurance premiums paid by Australians need to cover any increase in wages and the cost of medical equipment and procedures available through private hospitals.
Butler said the increase in private health premiums remains below the cost for other insurance products, which will rise by around 17 per cent in 2023.
What have private health insurers said about price rises?
Health insurers had reportedly asked for an annual increase as high as 6 per cent late last year, which Butler rejected in light of the competing cost of living pressures Australians are facing.
Several providers have faced criticism that they are lifting prices for some policies by more than the approved rate. NIB announced a 4.10 per cent increase on Tuesday.
However, NIB’s CEO and managing director Mark Fitzgibbon said the increase reflects the rise in health and medical treatment costs post-COVID.
“We’re doing our best to maintain affordability yet spending is growing across healthcare, driven by an aging population, the rise of chronic conditions and the cost of new technologies,” he said in an ASX announcement.
“We’re not sitting back passively responding to inflationary pressure by simply lifting premiums. We have a range of new measures designed to help members maintain good health as well as reduce out-of-pocket expenses.”
How does the premium increase compare to inflation?
The rise in private health insurance premiums remains below those of wages and inflation, which increased by 4.2 per cent and 4.1 per cent, respectively, in 2023.
How can you save money on your private health insurance?
Mickenbecker warned Australians not to drop their insurance but instead search out better-priced policies with similar inclusions.
There are bands within the tiers — basic, bronze, silver and gold — and it’s worth shifting to the lower end of your tier if it still fulfills your health needs, he explained.
For example, a family can save almost 10 per cent if they move from a premium silver policy to a lower silver policy.
The savings from moving down a tier altogether are “much, much greater” but consumers should be wary of the inclusions that they will lose from any changes.
Why do premium increases vary across different providers?
The Commonwealth is tasked with ensuring that the public and private sectors work side by side to provide for all Australians.
As well as assessing the average annual premium increase the Department of Health approved premium increases under the Private Health Insurance Act 2007.
Health insurers submit details of their proposed increases, demonstrating the claims history on the policy, how it stacks up against the premium and expected claims over the next 12 months.
Mickenbecker said the industry is tightly regulated and analysis is conducted at a policy level. He notes that each provider sets a different increase as they balance their customer base and claim projections.
The health minister must approve these before an insurer can apply a hike and pass it on to consumers.
– with additional reporting by AAP
