Nearly 14 million Aussies are about to be hit with higher health insurance premiums, but we still don’t know how bad the bill is going to be.
Private health insurers are legally allowed to increase their premiums once a year from April 1, with approval from the health minister.
In December, Health Minister Mark Butler rejected initial proposals from the industry – with planned increases believed to be as high as 6 per cent – and asked them to put forward a “more reasonable figure”. But two months on, consumers have still been left in the dark.
Compare the Market economic director David Koch said time was running out for customers to get a fair chance to act on price changes.
“We know from years past that these price hikes can add hundreds of dollars to private health premiums and that’s too much for many families already at their limits,” Koch told Yahoo Finance.
“Consumers have previously had more warning to act but, this year, they could have as little as a month to consider their options if this announcement is pushed out to March.”
RELATED
Koch urged the government not to delay the announcement any longer than necessary.
“Now, as the country faces its biggest cost-of-living crisis in decades, we should be doing everything in our power to support the 14 million Australians that choose private health cover, to shop around and find policies that offer good value for money before price hikes come into place,” he said.
Premiums rose by 2.9 per cent last year, adding an extra $134 per year in premiums for the average family and $60 per year in premiums for the average single.
Government responds
Yahoo Finance contacted the Department of Health to get an update on when the premium increases would be communicated, but no solid date was given.
“With household budgets under pressure, it is important to make sure that any increases are adequately justified and as low as possible,” Butler told Yahoo Finance.
“The outcome of the premium round process will be communicated once I have made decisions regarding all insurers’ premium change proposals.”
The minister requested further resubmissions from some insurers in late January.
In some previous years, the approval of premium increases has been communicated in late February and early March. However, last year it was announced at the start of February and, for the four years prior, it was in December.
The government noted that ‘portability’ rules meant customers wanting to switch to another hospital policy or health insurer could do so without re-serving waiting periods.
Insurers accused of ‘sneaky tactics’
‘Barefoot Investor’ Scott Pape also had some stern words for the government, labelling the industry an “absolute disgrace”.
He noted that, while it was “technically true” that insurers could only increase prices once a year, they could also close down existing policies and simultaneously release new, more expensive policies at any time.
Pape said his family had a gold-tier hospital-only cover with Health Partners – which was one of the best-value products on the markets 10 years ago. That product has now been closed to new customers.
“And here’s the rub: today, if a new customer wants the same cover as me, it would cost them $2,360 more than I’m currently paying per year,” Pape wrote.
Analysis by consumer advocacy group CHOICE found several insurers were using “sneaky tactics” like this to “jack up” prices.
Pape recommended people consider whether they actually needed private health insurance, to consider downgrading their cover, and to use the government’s to compare policies on the market.