How Much is Your Health Insurance Premium Increasing?

Private health insurance premiums rise every year on the 1st of April. For many Australians, this means health cover is becoming unaffordable, which results in them dropping non-essential cover options, switching health funds or cancelling their policy altogether.

If you have private health cover, chances are you’ve received a letter informing you of your premium increase. However, health funds do not increase their prices by the same percentage, and you are free to shop around and switch policies whenever you want.

If you’re wondering whether your health insurance policy is still worth the price you’re paying, then it might be time to shop around and compare quotes to determine if you’re still getting the best deal for your current budget and requirements.

What is the average cost of a health insurance policy?

The health insurance premium you can expect to pay will depend on the fund you choose, the type and level of cover you select (Hospital only, Extras only or Combined), and the state you live in.

When comparing the average premiums and their respective increases, you should consider the overall benefits offered and the policy's annual limits. For example, one company may have a higher premium increase than another, but they might provide more generous benefits or have an overall more affordable product price.

What causes health insurance premiums to increase?

• Increase medical and health-related costs.
• The rising cost of pharmaceuticals.
• The rise of chronic illnesses within the Australian population.
• Increase in health insurance claims.
• Upsurge of Australia's ageing population who need more medical and surgical care.
• Many younger Australians are abandoning the private sector.
• More complex and costly medical procedures being required.
• The growing need for innovative technologies and the increased cost of new medical equipment.
• Increase in doctor’s charges, nurses’ wages and hospital staff salaries.
• The health insurer having initially under-priced their policies.

While health insurers generally keep reserves to cover unexpected increases in salaries and equipment, if such increases persist then they have no choice but to submit a rise in health insurance premiums or risk financial instability. If premiums never increase, then these health funds would not be able to provide excellent value insurance and keep up with the populations growing demands for high-quality healthcare.

Government changes possibly contributing to premium hikes

The government recently released new health insurance rules designed to provide clarity on what's covered by funds. These guidelines stipulate what procedures and treatments must be included in each level of Hospital cover (Gold, Silver, Bronze and Basic) and might be another reason for the rise in average health insurance premiums.

Average private health insurance premiums increase from 2010 to 2019

Source: Australian Government Department of Health

Even though the price of health insurance goes up annually, this year has been the lowest increase we’ve seen in almost a decade.

6 Ways you can lower your health insurance premiums

Unexpected illnesses and accidents can happen to anyone, no matter how healthy you are. So, if you want to keep your health insurance affordable then there are some things you can do:

• 1
  Review your current Hospital and/or Extras cover and check what benefits you no longer need and whether your level of cover is still relevant to your current lifestyle. Take note, if you want to avoid the Medicare Levy Surcharge and maintain your Lifetime Health Cover status, you need to have a Hospital policy.
• 2
  Benefit from an ultra-competitive industry. Health funds have to continually improve their prices and offerings to retain customers and gain new ones. With a bit of research, you can find all sorts of discounts, bonus deals and refer friend incentives.
• 3
  Lock in your premiums when you are paying annually and skip the April premium increases altogether.
• 4
  Consider paying a higher excess or co-payment to reduce your premium.
• 5
  You can potentially save hundreds when employed in a relevant industry and applying to an industry health fund, for example, Teachers Health and Doctors Health Fund.
• 6
  Compare policies and shop around for a fund that offers cheap premium, while still providing you with a level of cover suited to you and your family's requirements.