Private health insurers have raised premiums on some policies to more than four times the approved average, Choice says

Many private health insurance funds have raised premium prices as much as five times the approved annual increase for some policies, according to consumer advocacy group Choice.

Earlier this year, the government approved an average annual increase in health insurance premiums of 3.03 percent, which took effect on April 1.

It found that in many cases Australians with private health insurance were paying “significantly more” than the announced price increase of 3.03%.

Insurers had previously requested an increase to 6 per cent, which Health Minister Mark Butler rejected on public interest grounds.

Butler said the industry’s initial offers were unreasonable given “record profits” and the context of cost of living pressures.

According to Choice, the highest increase of more than 17 per cent was seen at Australian Unity’s Gold Complete Hospital with a $750 surplus in Western Australia.

“Of the more than 24,400 hospital and combination policies in our database, only 29 policies saw an increase of exactly 3.03 percent,” said Choice health insurance expert Uta Mihm.

“(This) means many Australians now pay significantly higher monthly health insurance costs.”

One in seven households has difficulty paying for health insurance, according to a study by comparison site Finder.

The average cost of private health insurance was about $160 per month for a single person, or $1,920 per year.

Finder’s latest research shows an estimated 354,000 Australians have canceled their health insurance, while around 590,000 others have switched to another provider.

Even among providers touting a lower-than-average price increase of 3.03%, including HCF’s 2.89%, the lowest of the large health funds, prices for some individual policies have risen significantly.

According to Choice, HCF Hospital Gold’s $250 police allowance has increased by 15 percent.

The 15 percent increase also affected HBF Gold policyholders, while the fund’s average growth was 3.95 percent.

But Finder insurance expert Tim Bennett told the ABC: “That’s how the average works.

“Each policy has a different set of premiums in terms of how much it actually costs to cover the offer of this type of treatment.

“Gold insurance is much more expensive to provide and the reason is two-fold.

“The first reason is that… we have an aging population and, in particular, an aging private health insurance customer base.

“The second reason is that more complicated treatments for gold policies are more expensive.

“We are getting better at performing joint replacements, and we are developing (new ways) to make pregnancy and childbirth a better experience. Weight loss surgery is another surgery that is becoming more complex but ultimately more expensive.

“Frankly, the reason more older people use private health insurance is primarily because of the cost of living… people will give it up if they find it too expensive.

“It’s a bit like ouroboros, a snake eating its own tail.

“It’s certainly a vicious cycle, because as health insurance becomes more expensive, more and more young people are priced out… and as older people have more complex health needs, insurance becomes more expensive and the cycle starts over again.”

Landing…

Private Healthcare Australia chief executive Rachel David said providers were struggling to reflect rising health care costs, noting premium increases were “well below expectations” in the face of the rate of inflation.

“We deal with inflation the same way we deal with any other part of the economy,” she said.

“Hospitals therefore had to take into account significantly increased costs for recruitment, salaries, energy and food. To be able to offer value for money we need to be able to cover these costs, which is why an increase in contributions this year was absolutely necessary.

“The process for determining these prices is extremely rigorous.

“The submissions go first to the Australian Prudential Regulation Authority, then to the Department of Health, and then they review everything from claims… to management and operating costs before they approve the increase.

“This time, some funds were asked to apply up to three times to actually convince regulators that everything they were asking for was fair.”