For those with private health insurance, the premium increases that come along yearly are an annual thorn in the side. However, in the past few years at least, the average increase has been relatively low compared to pre-pandemic years. This year’s average increase of 3.03 per cent was slightly higher than 2023’s 2.90 per cent. But it was well below the 5.59 per cent of 2016 or the huge 6.20 per increase of 2014.
Unfortunately, if current indicators are correct, this period of relatively mild increases is about to come to an end. The outgoing CEO of one of Australia’s biggest private health insurers has warned Aussies to brace for a return to the bad old days. And older Australians could be the ones who bear the brunt of the changes.
Mark Fitzgibbon, who retired from the role at NIB on 1 September, said a surge in customer claims could drive the spike. Elective surgeries have risen sharply in the post-pandemic recovery period, pushing up the number of claims.
To cope with that, he said, premium rises may need to return to pre-COVID pandemic levels. Increases of up to 6 per cent could not be discounted, Mr Fitzgibbon warned.
He said the federal government would have a role to play in the magnitude of changes. “Obviously, we hope that government policy is rational,” he said. “[However], we may need premium increases above the long-run average, or at the long-run average at the very least.”
Premium increases and older Australians
As Australians take in Mr Fitzgibbon’s warnings, CHOICE magazine reported that over-50s are already struggling to pay insurance premiums. A survey commissioned by CHOICE showed that 90 per cent of respondents felt private health insurance was important to them.
However, more than half of them admitted to struggling to pay their premiums. These respondents said they would need to juggle their finances or find a better deal to maintain coverage.
Another alternative some policyholders are considering is reducing their coverage. But while this would cut costs, it would not be without risk. CHOICE cited the problems facing one 76-year-old, Diane Bunworth. “Our current monthly premium is $462; that’s a big dent in our Age Pension,” she said. But Ms Bunworth is well aware of the potential consequences of dropping to a lower tier of courage. “We risk losing cover for procedures often needed for people at our stage of life.”
Advocacy group National Seniors Australia (NSA) said Ms Bunworth’s dilemma is being replicated all over Australia. The group’s CEO, Chris Grice, believes the private health insurance sector is failing many older Australians and says the industry should be subject to a thorough review by the Productivity Commission.
Mr Grice also called for an increase in the private health insurance rebate for people on lower incomes.
What you can do
Whether or not Mr Grice’s call is heeded remains to be seen. Even if it were, though, it’s unlikely to produce any changes in time for the next round of premium increases.
That leaves the ball firmly in the customer’s court, at least in the short term. There are two main ways in which you may be able to make a difference to your premium amount.
The first is to check what your policy actually covers. As pointed out by Ms Bunworth, risk comes with reducing costs by removing cover for procedures that may be required later in life. However, your policy might include ‘extras’ that you will never need. These can include things such as pregnancy cover, orthodontics, and IVF.
Secondly, compare your premiums to those of other insurers. This year’s average premium increase of 3.03 per cent was just that – an average. Some insurers – including NIB – had much higher increases.
The result is that a policy that once might have been the cheapest could now be one of the most expensive. A yearly check of your policy’s coverage and premiums is therefore highly advisable. Websites such as Compare Club can assist with this.
Do you have private health cover? When was the last time you compared your premiums to those of other insurers? Let us know via the comments section below.
Also read: Why car insurance costs are going through the roof
Disclaimer: This article contains general information about health issues and is not advice. For health advice, consult your medical practitioner.
