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Why Do Funds Increase Their Premiums?
Each year, health insurance companies make the case to the Federal Minister for Health to adjust the cost of their annual premiums based on the rising cost of providing health insurance.
The government reviews these proposals and releases figures on the average rate rise in a lead up to the rate change which usually occurs on April 1. Due to the ongoing impact of COVID-19, many health funds have announced that they will be delaying their premium increases until later in the year.
- Medibank – who will be increasing their premiums by an average of 2.96% on 1 June1
- HCF – who will be increasing their premiums by an average of 3.33% on 1 September2
- NIB – who will be increasing their premiums by an average of 2.72% on 1 October3
- Bupa – who will be increasing their premiums by an average of 3.39% on 1 October4
To give you an idea of the rate rises we’ve seen, the table below shows the average premium price increases for the last ten years. But note that the rate rises listed below is an average of the rises in cost across all the insurance providers, meaning each individual provider will see costs rise by an individual rate.
In 2023, health insurance premiums will rise by an average of 2.9%5.
While this year’s average rate rise is relatively low compared to some of the previous years, it unfortunately comes at a time when many Aussies are feeling cost-of-living pressures due to high inflation6.
While rate increases can be a blow to your bank account, the price increase can be necessary thanks to factors like the rising cost of healthcare in Australia.
Healthcare costs are more expensive than ever
One of the biggest reasons for why funds increase premiums – based on history – is the growing cost of healthcare in Australia. This includes the price of medical equipment and wages of hospital and medical staff7.
Australians are also going to hospital more8 and having more complex treatments7. In 2021, private health insurance companies paid out 382,400 hospital claims on behalf of their members where the benefit was more than $10,000, this is a 6.7% increase from the previous year.9
Australians are making more claims
Another major reason for why health insurance premiums may increase is based on how many people are making claims. In 2022 health funds paid out $22.2 billion in benefits to members, which is a 1.6% increase on the $21.9 billion in payouts made in 2021.10
What can you do about it?
As cost-of-living pressures continue, now is a great time to compare your health cover to make sure you’re getting a good deal and not paying more than you need to.
Call our experts on 1800 784 772 to discuss your individual health insurance needs or compare from a range of health insurance providers and policies online*
1. Medibank – Medibank delivers lowest premium rise in 22 years and COVID-19 give back program tops $1 billion
2. HealthDispatch – HCF confirms the deferral date for its approved premium increase
3 nib – nib further delays private health insurance premium rise
4. Bupa –Bupa delays premium increase until October
5. The Minister for Health and Aged Care Media Release –Annual private health insurance premium rise
6. ABC News –Australians feeling the sting of inflation and rising interest rates could soon face a recession – and more pain
7. Commonwealth Ombudsman – The reasons and processes behind premium increases, and your options if you’re considering changing your health insurance policy
8. Australian Institute of Health and Welfare –Australia’s hospitals at a glance
9. PHA – Annual Hospital High Claims Report 2022
10. APRA: Quarterly private health insurance statistics – highlights (December 2022)
*iSelect does not compare all health insurance providers or policies in the market. The availability of policies will change from time to time. Not all policies available from its providers are compared by iSelect and due to commercial arrangements, your stated needs and circumstances, not all policies compared by iSelect are available to all customers. Some policies and special offers are available only from iSelect’s contact centre or website. Click here to view iSelect’s range of providers