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Private health insurers are set to bump up premiums next month, the second time in six months members have been slugged with higher fees.
On April 1, Australia’s healthcare sector is set to implement premium rises that will make the cost of holding private hospital cover more expensive.
The industry traditionally increases prices annually, but due to the coronavirus pandemic, last year’s April rise was delayed to October.
Insurers claim the latest rise is due to inflation and the increased costs of providing healthcare.
The rise is in despite of the Reserve Bank of Australia flagging inflation is expected to remain below its target level of 2 to 3 per cent and wages growth is anticipated to remain flat for the next few years.
Canstar financial executive Steve Mickenbecker said the average increase over the six months to April from both rises sits at 5.66 per cent and would be sting to a number of policyholders, but not enough to deter them from renewing.
“In April the spread of increases that will come into effect from the insurers range from a low of 0.50 per cent to 5.47 per cent at the top and underlines just how important it is for people to compare policies and find as low a premium as they can for the level of health cover they need,” he said.
Latest quarterly figures from the Australian Prudential Regulation Authority (APRA) shows the number of new customers to the private health sector rose 100,000 on a year-on-year basis.
The statistic has bucked the longer term trend of new policyholders declining, particularly younger Australians who are choosing not to take up health cover due to its cost.
According to Canstar, hospital cover for singles after April 1 will on average rise by $53 while family plans will jump by about $107.
Private health care tends to skew towards older customers and Mr Mickenbecker believes COVID-19 may have influenced more people to seek cover.
“The health crisis may have been the greatest contributing factor to the rise in Australians taking out health insurance in the face of the increased cost for cover,” he said.
“There is also the perennial issue of how young, healthy adults extract value from health insurance, as well as the added cost pressure of two premium rises in six months.”
The private health insurance sector has been flush with cash from subdued claim numbers during 2020, which is the result of elective surgeries being halted and the nation prioritising its response to the pandemic.
Bupa managing director Emily Amos argues the sector has absorbed a significant proportion of the cash and the inflation levels within the health sector are rising at rates much faster than the general economy.
“The reality is we are operating within an environment where the price of health insurance premiums is driven by rising healthcare costs that are increasing at a steeper rate than general economic inflation which affects things like supermarket grocery prices,” Ms Amos said.
“While claims were impacted in 2020 due to COVID restrictions, the underlying health conditions of Australians have not changed, so claims have generally been deferred rather than cancelled.”
Bupa said its premiums would on average rise 3.21 per cent with the April 1 price increase.
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