The increase is the largest annual jump in premiums since 2019 but is relatively modest by historical standards and has come in lower than inflation.
Australia’s largest health insurer Medibank Private will raise its premiums by 3.3% while BUPA’s will increase by 3.61%.
HCF will see a 2.89% rise with NIB approved for an increase of 4.1%.
Australia’s 31 private health insurers are allowed to increase their premiums once a year after individual approval from the federal health minister.
Calls for higher increases rejected
The announcement of this year’s annual review was delayed, with health minister Mark Butler reportedly rejecting the industry’s initial requests for premium rises as high as 6%.
In December, Mr Butler said he had written to every private health insurer, directing them to put forward more reasonable figures, considering their “years of record profits and declining proportion of premiums they return to customers”.
Some political commentators also suggested Tuesday’s announcement was delayed until after the Dunkley by-election last Saturday.
This year’s rise of 3.03% follows modest rises of 2.9% in 2023 and 2.7% in both 2022 and 2021.
Pandemic profits see lower premiums
Private health insurance premiums have been comparatively low by historical standards since the COVID-19 pandemic which restricted Australians’ access to elective surgery and some health services.
This led to private health insurers building up significant cash reserves.
The sector has so far returned around $4.3 billion to customers in the form of cashbacks and deferred premium rises since the pandemic, under the watch of the Australian Competition and Consumer Commission.
Around one million Australians have signed up for private health insurance since COVID with around 55% of the population currently a member of a health fund.
Insurers also hit by inflation, sector claims
Insurers had argued it would be impossible to maintain the low premium increases of recent years given private hospitals were also grappling with inflation.
Today, industry body Private Healthcare Australia said health inflation had risen 5.1% over the past 12 months with a 6.5% rise in medical and hospital services being the main driver.
“Health funds are walking a tightrope between keeping premiums as low as possible to maximise access to private health and providing adequate funding for hospitals and frontline health workers to deliver quality care,” CEO Rachel David said.
“Our hospitals need to pay significantly more for staff recruitment, power and food and the funds need to be able to cover these costs. Health funds are also paying more for essential services like cyber security and IT services to support billing and claims.”
Private Healthcare Australia said both hospitals and extras claims had jumped above pre-pandemic levels in the past year, with payout amounts up 10% on the previous year.
Insurance hike lower than wage growth
The health minister said it was the second year in a row that wages, as measured by the Wage Price Index, have grown faster than health insurance premiums.
Last month, the 2023 Wage Price Index figure came in at 4.2% while inflation is currently at 4.1%.
Mr Butler said it was important Australians were getting value for money from their private health insurance.
“When costs rise, Australians want to know that higher premiums are contributing to system-wide improvements, like higher wages for nurses and other health workers and ensuring that affordable services are available,” he said.
It’s now up to health funds to contact their members, informing them of individual premium rises.
The price increases range from as low as 0.27% for the not-for-profit Health Care Insurance Ltd to 5.82% for CBHS Corporate Health Pty Ltd.
The federal government also provides a full list of annual price changes in private health insurance premiums.
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