Millions of Aussies will be “hurt” by a health insurance premium hike adding to the mounting cost of living pressures continuing to plague households.
Labor on Wednesday approved an industry average premium increases of 3.73 per cent with Health Minister Mark Butler arguing the increase was a “justified and proportionate” rise.
The jump, which comes into effect from April 1, marks the largest increase in seven years and comes above inflation which was 2.5 per cent in the 12 months to January.
David “Kochie” Koch, the economics director at Compare the Market and former Sunrise host, said the premium hike would still hurt Aussie households despite it being expected.
“It’s no surprise that these premium increases have been on the horizon, given we usually see health funds adjust their premiums every year on 1 April,” Kochie said.
“However, this doesn’t mean it’s not going to impact the more than 14 million Australians who currently have some type of health insurance.”
He noted there were “many factors” contributing to health insurance hikes as rising doctor fees and the cost of medical equipment forced the insurers to up their premiums.
“At some point, this cost is going to be passed onto everyday Australians,” he said.
Kochie said funds needed to undergo a “pretty strenuous process” to get their premium hikes approved.
The insurer needs to submit their increase to the Department of Health for assessment alongside the Australian Prudential Regulation Authority and the Health Minister to get the tick of approval.
These were knocked back in November after insurers proposed hikes between five and six per cent and were rejected again during a second round of proposals in January.
After refusing the submissions earlier this year, Mr Butler urged the insurers to put forward “more reasonable” proposals and demanded they submit prices “more in the interests of their members”.
Kochie said the government’s initial position was proof Aussies should “rest assured knowing there’s a process in place to ensure any price hike is fair and justifiable”.
Some Australians have been forced to downgrade their coverage as price pressures eat into their budget, according to CHOICE insurance expert Jodi Bird.
He noted the price of gold hospital insurance had increased by 45 per cent over the past four years compared with the 11.9 per cent average rise across all levels of cover.
By opting for a lower level of health insurance, Aussies were sacrificing key medical services that were essential, Mr Bird told SkyNews.com.au.
“(Gold insurance) covers things like mental health in hospital, things like hip replacements and often it’s the people who are the most vulnerable who are affected by these increases the most,” Mr Bird said.
“So it’s really become a kind of problem where it’s leaving out the most vulnerable people in society.”
While many have complained about the recent hike, Private Healthcare Australia CEO Rachel David said the increase was well below health sector inflation which sits at about four per cent.
She also noted an eight per cent increase in payments to hospitals by health insurance funds in 2024.
“This is as low as we can go and still be able to pay our hospitals properly,” Ms David told Sky News.
During the negotiation process with the government, some insurers had reportedly asked for a six per cent increase, citing higher costs of operation, with NIB announcing an average rise of 5.79 per cent.
