Millions of Australians with private health insurance could be paying more for their policies this year with Compare the Market’s Economic Director, David Koch, warning of a “perfect storm” putting pressure on premiums.
Health Minister Mark Butler has asked private health insurers to come up with a more “reasonable” proposal to reduce the strain on household budgets.
With the rising cost of living at the centre of focus leading into this year’s federal election, there is mounting pressure for politicians to ease the impact of price hikes.
Mr Koch said inflationary forces and tensions between hospitals, governments and insurers would likely weigh heavily on this year’s premium price negotiations.
The changes, set to be confirmed in the coming weeks, will take effect on 1 April 2025.
“The cost of delivering care, paying staff, and powering hospitals has all increased over the past year,” Mr Koch said.
“On top of that, old red tape and regulations fixing the price of medical devices like prosthetics have kept costs incredibly high in Australia.
“We’ve seen one of the country’s biggest hospital operators, Healthscope tear up its contracts with health funds over a funding dispute that could leave thousands of patients out-of-pocket.
“All of these tensions are likely to have an impact on the cost of health cover this year. While the health minister is still determining what the industry average will be, we know that last year’s announcement came in March, giving Australians very little time to compare.
“We’re urging customers to be prepared as shopping for cheaper deals may be one of the only ways for some to avoid the sting.”
Average health insurance premiums have increased just over 38% in the past decade, but customers have not seen an annual rise of more than 5% since 2016. Health insurance premiums must increase to keep up with the rising cost of healthcare however, these annual increases must go through an approval process to ensure they are reasonable.
Last year, insurance companies, the Australian Prudential Regulation Authority and The Department of Health agreed on an average premium increase of 3.03%, which was below the level of inflation and wage growth at the time.
Mr Koch said that while insurers would try to keep price hikes to a minimum, this year’s price changes may come as a rude shock to people trying to balance the household budget.
“If you’re unhappy with how much your premium is increasing this year when you receive your updated policy information, run a quick comparison and see if another fund can offer similar cover or better value for a cheaper price,” Mr Koch said.
| Health insurance rate increase by year | |
| Year | Rate rise* |
| 2024 | 3.03% |
| 2023 | 2.9% |
| 2022 | 2.7% |
| 2021 | 2.74% |
| 2020 | 2.29% |
| 2019 | 3.25% |
| 2018 | 3.95% |
| 2017 | 4.84% |
| 2016 | 5.59% |
| 2015 | 6.18% |
| 2014 | 6.2% |
| Total increase | 38.1% |
| * Industry average, as taken from health.gov.au | |
“While the headline average figure is what everyone talks about, we know that there can be huge discrepancies between insurers and policies. Last year, we saw increases as low as 0.27% and as high as 5.82% at individual funds, so doing some research can make a big difference.
“Some health insurers will even allow you to pay for your policy a year in advance, which means you can effectively lock in last year’s cheaper prices for the next 12 months.”
For more information and interviews please contact:
Sarah Orr | 0401 044 292 | [email protected]
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