Rise in health insurance premiums to test family budget

Rises in health insurance premiums are small but enough to stretch the family budget.

Health insurance premiums will rise by 4.8 per cent on average tomorrow.

Health insurance premiums will rise by 4.8 per cent on average tomorrow, slightly less than in recent years but still enough to stretch the family budget. What’s more, the government rebate is offering less of a premium reduction, and high-income earners must choose between having insurance and paying the Medicare levy surcharge. No wonder people are starting to resent their policy.

Just under half of all Australians (46.6 per cent and falling) have hospital cover, but policies vary greatly with excess payments, exclusions and restrictions, and fine print that may determine whether you can afford private treatment at all. Arrangements between health funds, specialists and hospitals can cover all costs, or a set amount of costs, or leave you with out-of-pocket hospital expenses that averaged $274.72 last quarter.

For higher-income earners, the system is geared in favour of you having insurance and keeping it long-term. Under lifetime health cover, people who delay taking out insurance pay a 2 per cent loading on top of their premium for every year they are aged over 30. The rebate is means-tested and indexed to the consumer price index, so eroding over time, while the Medicare levy surcharge becomes an issue for singles earning more than $90,000 a year or families earning more than $180,000.

Universal healthcare has served Australia well, and insurance has long allowed those who can afford it faster access to medical treatment, their choice of specialist and subsidised care outside hospital. For most, it provides peace of mind, but value for money questions remain. Policies are changing rapidly, and reforms to make it easier to shop around are imminent, while stakeholders keep working to reduce health cost pressures. In the meantime, the latest data on the performance of unrestricted health funds may help answer questions you have about your insurance.

PRIVATE HEALTH INSURANCE BY THE NUMBERS

Lowest average premium increases

HCF 3.65%

Australian Unity 4.46%

NIB 4.48%

Latrobe 4.49%

Medibank 4.60%

Highest hospital cover retention rate (larger funds)

Health Partners 89%

HBF 88.1%

Westfund 86.5%

Bupa 86.1%

Peoplecare 82.7%

Lowest complaints compared to market share

Peoplecare 0.2%

Westfund 0.3%

Health Partners 0.3%

Latrobe 0.4%

HIF 0.6%

Highest proportion of services fully covered (NSW)

Phoenix 98.2%

Latrobe 97.5%

HCF 97.4%

CDH 97%

Peoplecare 96.4%

Highest proportion of services with no gap (NSW)

Phoenix 91.9%

Peoplecare 91%

Australian Unity 90.7%

HCI 89.4%

Onemedifund 89%

Highest rate of return (benefits) on premiums paid

Health.com.au 96.3%

HIF 94.8%

MDHF 93.3%

Phoenix 92.8%

CDH 91.9%