Health fund premiums to rise by twice the inflation rate again
Thousands of health fund members planning to dump their health cover have found they can save big bucks by paying less for the same level of insurance. WHY YOU NEED TO SWITCH
Health
Don't miss out on the headlines from Health. Followed categories will be added to My News.
EXCLUSIVE
Thousands of health fund members planning to dump their health cover found they can pay less for the same level of insurance - or even find cover of a higher value - saving $100-$1000 a year.
Insurance broker iSelect crunched the data for News Corp on which products they are switching to and found one in 12 people saved more than $1000 a year.
News Corp’s special report comes as companies that make hip and knee replacements accuse health funds of ripping off consumers by failing to pass on $314 million in savings from government price cuts imposed on these medical devices.
News Corp’s special report comes ahead of the latest statistics expected to show a further drop in health fund members.
Health funds are expected ask the government this month for a premium rise of over 3 per cent, nearly twice the inflation rate, from next April.
But the companies that make hip and knee replacement have branded the price hike as a “scam”.
“It’s in the public interest for the Australian Prudential Regulation Authority to ensure the ‘Big 3’ health insurers pass on every cent of these medical devices savings to their customers through lower premiums as promised - and throw every book available at them if they don’t,” Medical Technology Association of Australia CEO Ian Burgess said.
It comes as the latest health fund statistics to be released today are expected to show a further drop in health fund membership as experts fear the sector has entered a death spiral of unaffordability.
MORE NEWS
Bizarre: How Silver health fund cover can cost more than Gold
Which health funds pay the lowest benefits
The photo that is enraging Australia’s 5 million migraine sufferers
A survey of over 1000 iSelect customers who switched health cover between April and September 2019 found a third were planning to dump their cover as rising premiums made it too expensive.
However, most decided to stick with health cover after switching to another provider offering the same level of cover for a cheaper price.
Half of those contacting iSelect ended up getting the same value cover but paying less with one in twelve people saving more than $1000 a year and one in six saving between $500 and $1000 on their premiums.
A further 37 per cent saved between $100 and $300 a year.
A separate analysis by the insurance broker of people switching cover between July and October 2019 found most people (46 per cent) are taking out the second lowest level of cover called Bronze or Bronze plus, a third had silver cover and one in 10 bought top level Gold cover.
In the past five years around 100,000 young healthy people have quit health funds while over 360,000 people aged over 60 who are more likely to claim have joined, pushing up premiums.
The proportion of the population covered by health funds has plunged from 47.4 per cent of the population in 2015 to 44.2 per cent as it becomes more and more expensive.
The latest figures due out today are expected to show the decline is continuing and the government is under mounting pressure to outline further reforms.
Private Healthcare Australia CEO Rachel David says Australian consumers are paying up to five times more than overseas customers for medical devices like hip and knee replacements and cardiac stents.
She wants the government to allow the Independent Hospital Pricing Authority to set medical device prices for both public and private hospitals to slash health fund costs and keep a lid on premium rises.
Mr Burgess said health funds should clean up their own financial waste first.
An AlphaBeta report earlier this year found health fund members are paying 20 per cent more than they should for cover, as they foot $400 million a year for funds’ marketing costs and exorbitant administrative charges.
Originally published as Health fund premiums to rise by twice the inflation rate again