One thing cash-strapped Aussies are ditching in droves

Cash-strapped Aussies weighing up whether to maintain one expense have been tipped over the edge by the biggest price rise in seven years.

Millions of Aussies are cancelling their private health insurance policies as prices have their biggest jump in seven years.

Coming in April, policyholders will see an average price rise of 3.73 per cent, putting further pressure on household budgets.

Based on this increase, the average monthly premium will rise to $160 per month and cost an extra $72 a year.

Finder says following news of the increases, 16 per cent of policyholders – the equivalent to 3.3 million Aussies – are planning to cancel their health insurance policy.

It will become on average 3.7 per cent more expensive to have private health insurance. Picture: NewsWire / Martin Ollman

Finder health insurance expert Tim Bennett said there was a growing trend of Australians ditching their insurance policies, as rising premiums and the cost of living took its toll.

“Australians are abandoning their health insurance in large numbers as they grapple with the mounting pressures of rising living costs,” Mr Bennett said.

Meanwhile, Canstar data insights director Sally Tindall warns the 3.73 per cent is an average and not a cap to how high insurance prices will rise.

“The take-up of private health insurance has been driven by a carrot and stick approach, with rebates to encourage sign-ups and financial penalties for those that don’t. However, the carrot is starting to look a bit worn with this latest round of price rises in a cost-of-living crisis,” she said.

“The knee-jerk reaction for many households might be to reduce or drop their health insurance cover – but know there are options before you go nuclear.”

The price increases in April come after a lengthy negotiation period between the federal government and insurers.

Health insurance premiums are set to climb on the back of rising healthcare costs. Picture: NewsWire / Andrew Henshaw

Health Minister Mark Butler previously told private health insurers to start again on three occasions before coming up with a “justified and proportionate” 3.73 per cent increase.

“In December, I wrote to every single one of the 29 insurers asking that they sharpen their pencils and provide us with an increase that was more in the interests of their members,” Mr Butler said.

“Based on the resubmissions, I was not prepared to tick and flick their asks and instead asked them to resubmit again.”

Private Healthcare Australia chief executive Rachel David said the rises in insurance prices followed a bump in healthcare costs.

“In Australia, the law determines doctors can charge whatever they like, and a small number are charging egregiously. We need to get this under control to ensure people can afford to see specialists when they need to,” Dr David said.

“It is not possible for health funds to chase rapid inflation in gap fees with additional benefits without increasing premiums.”

Originally published as One thing cash-strapped Aussies are ditching in droves