Experts have slammed private health insurance companies raising premiums from 1 October.
Yuting Zhang, professor of health economics at the University of Melbourne, says the justifications for the rise in prices – delayed by six months due to COVID-19 – “don’t stack up”.
“At a time when many policy-holders are facing financial stress and many elective surgeries or treatments suspended or delayed, this week’s price rise isn’t justified. With a further price rise already set for April 2021, it would be fairer to delay any fee hike until then,” she wrote in The Conversation.
Prof. Zhang says hospital and healthcare costs paid by private insurers have “reduced substantially” in 2020, claims have been decreasing and increases in chronic disease do not have to be covered before next year.
“Health fund premiums have risen by 61 per cent over the past decade,” Alan Kirkland, chief executive of consumer advocate CHOICE, told Nine. “The justification is that the amount insurers pay out to cover your treatment is going up. But that doesn’t hold up this year.”
A Grattan Institute report revealed that private health insurance consumers were getting less value for their money because of out-of-pocket costs.
Australian Prudential Regulation Authority (APRA) figures show that in the year to June, 56,000 Australians aged between 20 and 49 dumped their cover.
Then the pandemic struck and access was denied to elective surgeries and benefits such as physiotherapy and optical services, further reducing how much people could get out of their insurance.
Furthermore, the pandemic showed the strength of the health system, CHOICE health campaigner Dean Price told ABC News. So, people feel less need to invest in private health insurance.
“The national response to COVID-19 has shown what happens when people are treated on the basis of medical need alone; public and private hospitals working together can meet the health needs of all Australians,” he said.
Premium rises were already outstripping static wages before the pandemic restrictions cost many policy-holders their jobs.
Premiums were set to increase on 1 April, on average, by 2.92 per cent, though some increases were as high as 5.6 per cent.
HBF and TUH have both cancelled their 2020 premium increases entirely, while small funds Onemedifund and Health.com.au have deferred the price rise until 1 January.
Australian Medical Association (AMA) president Omar Khorshid says Australia’s private health insurance system is struggling.
“This is only likely to get worse as a result of the global pandemic as people face unemployment or underemployment, and the economy is in recession.”
He said young people were dropping their insurance and more people over the age of 65 were taking it up.
But Dr Khorshid warned that as more older Australians take up private health insurance and the claims increase, the premium rises also inflate.
This would price younger Australians and families out of the market.
“Unless the drift away from private health insurance is stopped, we will see even more pressure on an already stressed public hospital system,” Dr Khorshid told Seven News.
“It is time for more reform, it is time for the government to stop underfunding the public and private health systems, time to stop making ‘savings’ at the expense of quality healthcare, and time to focus on fixing the system.”
Seven reports that the AMA is calling for the establishment of an independent body to regulate the industry and oversee premium rebate reforms, lifetime health cover loadings, the Medicare surcharge levy, youth discounts, long-term incentives for people to maintain their cover, and a minimum level of benefits for patients.
Some funds are giving premium reductions or price freezes for people accessing JobSeeker or JobKeeper payments, choice.com advises. It suggests you check with your fund for the details of their hardship support.
Can you afford the premium price rises? Will you ditch your private health insurance?
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Related articles:
https://www.yourlifechoices.com.au/health/your-health/why-do-you-have-health-insurance
https://www.yourlifechoices.com.au/finance/insurance/alarm-over-health-fund-exclusions
https://www.yourlifechoices.com.au/finance/insurance/health-premiums-should-decline
