Why your health fund premium is likely rising twice the ‘average’
Health fund premiums will rise by as much as $400 a year with many fund members slugged more than twice the promised average 2.9 per cent increase. Here’s why.
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Exclusive: Health fund premiums will rise by as much as $400 a year from tomorrow with many fund members slugged more than twice the promised average 2.9 per cent increase.
The nation’s largest health fund Medibank is raising the price of some of its Gold policies by 6.7 per cent and many Silver Plus policies by 5.9 per cent.
Bupa, Australia’s second largest insurer is raising the cost of one Silver policy by 5.6 per cent.
Some HCF members are facing premium rises of 3.2 per cent on their family cover, while
NIB’s Silver and Basic plus policies will increase an average of 4.3 and 3.9 per cent respectively.
It comes as News Corp can reveal the so called “average” 2.9 per cent premium rise figure – used by the government — is not an average of the premium rises of the policies offered but instead the percentage rise in premium income health funds receive.
“The percentage change in forecast contribution income is considered to be the most appropriate way of reflecting the price change in premiums that will be received by an insurer,” the Department of Health said.
Health Minister Greg Hunt and the insurance industry used the 2.9 per cent figure to boast that this year’s average annual premium rise was the lowest in two decades.
“From 1 April 2020, a single person will pay an average of $0.68 extra per week ($2.72 month $35.36 a year) family on average will pay $1.99 ($7.76 month $103 a year) more a week,” Mr Hunt claimed when he announced the premium rises.
But consumer group Choice said the five to six per cent rises most fund members face from tomorrow will hurt far more than advertised.
“That figure is almost, I guess, misleading it’s definitely not how people will interpret that figure,” Choice health spokesman Dean Price told News Corp.
“And it helps explain some of the shock that people feel when they get that notice from a health insurer notifying them of the increase, which is above the publicly stated average increase that there fund is passing on,” he said.
Health funds delayed their annual April 1 premium rises for six months after the government imposed surgery bands due to COVID-19 so now their members face two rises in six months.
Insurers have saved hundreds of millions of dollars as a result of the COVID-19 lockdowns and surgery bans.
Professor of Health Economics, University of Melbourne Yuting Zhang has calculated payouts for hospital treatment fell 7.9 per cent in dollar terms between December and March and a further 12.9 per cent between March and June.
Payouts for extras cover plunged 32.9 per cent between March and June this year.
Private Healthcare Australia chief Dr Rachel David said since the surgery bans were lifted in states outside Victoria surgery rates lifted to up to 124 per cent above normal as doctors sought to catch up on their treatment lists.
Health funds have offered their members hundreds of millions of dollars worth of rebates for telehealth consultations, automatic coverage for COVID-19 illnesses and discounts if members lost their job and could not pay premiums.
Medibank’s said across its hospital products, the lowest premium increase is 0 per cent and the highest is 7 per cent.
Seventy one per cent of Medibank customers on a singles policy will get an average increase on their premium of $3 or less per week ($12 per month), while 77 per cent of family policies will get an increase of $6 or less per week ($24 per month), the fund said.
Originally published as Why your health fund premium is likely rising twice the ‘average’