Insurers are set to raise health premiums this year by the lowest margin in 15 years but the increase would still be double the rate of inflation. The 1 April increase, of an expected less than 4%, will add around A$200 (US$159) a year to a family's health insurance bills.
However, the hike could have been greater had health funds not benefited from cuts to the cost of medical devices like hip and knee replacements and a reduction in the number of payouts, according to a report on news.com.au.
The last time health fund premiums rose by less than 4% was 2001 following the introduction of a 30% government tax rebate that dramatically lowered premiums. In that year, premiums did not rise at all. The following year they rose 6.9% and the average rise has been 5.9% since then.
The slowing in premium hikes follows last year’s government health fund reforms which included a A$1 billion cut to hip and knee replacements, and after health funds announced A$1.4 billion in profits in last financial year, raking in 4.3% extra premium revenue while their benefit payouts only rose by 3.7%.
“I’ve been for pushing for the lowest possible premiums and have made this crystal clear to the sector,” Health Minister Greg Hunt told News Corp yesterday.
“At this stage we are on track for the lowest health fund change in 15 years,” he said.
“One of the ways we’re doing this is by reducing costs for health insurers – which would otherwise be passed on through higher premiums.”
Health fund sources said that Mr Hunt is pressuring them to bring in an average premium rise under 4%. After receiving the funds’ annual premium rise bids late last year, the minister asked many funds to reassess and lower the rises they were seeking.