Health insurance premiums will rise by as much as 4% per year this year.
Federal Health Minister Greg Hunt has given his approval for private health insurers to lift their premiums by an average of 3.95 per cent from April 1.
Last year’s premium increase was 4.84 per cent. The government’s estimate of the increase this will cost a single person an extra $73 for the year. As for families, the government expects they will pay about an extra per $143 for the year.
“The Turnbull government’s reforms to take the pressure off private health insurance has today delivered the lowest annual premium change in almost two decades,” Mr Hunt said.
However, this may not do much to improve the affordability of health insurance — since the almost 4 per cent hike is twice as much as the average worker’s pay rise and other increases in the cost of living. Last year, wage growth and inflation rose by around 2%.
“Death and taxes are no longer the only certainties in life — massive health insurance price rises have also joined,” said Stu Varidel, Principal of Heart Financial Advisers.
With insurers increasing their annual premiums by more than double the rate of wage growth, it’s more crucial than ever to shop around and make sure you’re getting the best deal to avoid paying for cover you don’t need. Nevertheless, Mr Hunt said the outcome would have been worse without recent Government intervention. Already the significant private health insurance reforms that we announced in October last year have made an impact and they will continue to drive down costs. The reforms include savings of $1.1 billion from reform to the prostheses list, and “$6.4 billion every year in the private health insurance rebate to help keep premiums affordable.
Out of the four largest private health insurers, HCF’s premium hike 3.4% is the lowest. Medibank and its subsidiary AHM will lift their average premiums by 3.9%, Nib will lift its premiums by 3.95% and Bupa’s 4% increase is the most expensive, and higher than the average touted by the government.
Australians have among the highest life expectancy in the world and access to world class healthcare services and this comes at a severe cost. These costs are largely being driven by medical inflation and an increase in the frequency of people seeking treatment. The higher premiums are also driven by an “aging population, increasing chronic disease … and the cost of new technology. On a national perspective, we are running out of sufficient taxpayers to fund a growing retired population.
People are going to have to take greater responsibility for their lifetime healthcare costs. There are a number of strategies that can be employed to deal with this issue. Talk to us by calling us on 1300 861 143.
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