Australians are facing another significant increase in the cost of private health insurance, with the federal government approving an average premium rise of 4.41 per cent, effective from April 1st. This latest hike is slightly higher than the top end of predictions and represents the largest average percentage increase since 2017, exceeding the current rate of inflation.
This comes at a time when many Australians are actively trying to manage their expenses by downgrading their health insurance coverage. However, this trend is prompting warnings that such decisions could lead to substantial out-of-pocket expenses during medical emergencies.
A Stark Warning: The Real Cost of Downgrading Cover
The repercussions of downgrading cover were starkly illustrated by the experience of Marie and Trevor Cox from Victoria. On their way to the hospital for urgent shoulder surgery, the couple discovered their private health insurer of 40 years would not cover the procedure due to their reduced level of policy. This left them scrambling to find $30,000 for the surgery.
“I’m just a little fish and they make so much money — they had the ability to show compassion, but they didn’t,” Marie told the ABC, expressing her distress over the situation.
The couple had previously considered switching insurers but were persuaded to remain with their provider by accepting a cheaper, silver-tier policy instead of their previous gold coverage. This decision, made in an effort to save money, ultimately proved to be a costly miscalculation.
The Growing Trend of Downgrading Cover
The Coxes’ story is not an isolated incident. Analysis by consumer group Canstar reveals a significant number of Australians have been downgrading from comprehensive “gold” policies to save money. This trend has been exacerbated by insurance providers issuing the steepest price increases to customers with premium plans.
According to Private Healthcare Australia, approximately 360,000 individuals have switched away from gold policies since 2020. Government figures suggest this number is even higher, with over 400,000 people dropping their top-tier gold coverage between December 2020 and 2023.
Understanding the Latest Price Rises
The approved 4.41 per cent increase is an industry average, meaning individual premium hikes can vary significantly between providers.
- AIA Health Insurance is set to experience the highest average increase at 5.98 per cent across its various coverage options.
- NIB Health Funds Ltd and Medibank Private Limited follow closely behind with average increases of 5.47 per cent and 5.10 per cent, respectively.
- On the other end of the spectrum, GMHBA Limited will see a more modest increase of just 1.98 per cent, which is below the current inflation rate.
Sally Tindall, data insights director at Canstar, highlighted that individuals with gold-level coverage could face significantly higher premium increases. “While the average hike is sitting at 4.41 per cent, for those with a high-level of cover, know your premium increase could be far more severe,” she stated. “If history is anything to go by, the increase for Australians with gold cover could be in the vicinity of 11 or 12 per cent.”
Strategies to Mitigate Rising Costs
For those concerned about the escalating costs of private health insurance, Tindall suggests exploring options to switch to a comparable policy within the same coverage tier. This could potentially help offset or even neutralise the price increases.
“Get on the phone to your provider to understand exactly how much your premium is going up by,” she advised. “Then spend 30-minutes doing a health check on your insurance. It could potentially save you hundreds.”
Average Price Increase by Health Insurance Provider
Here’s a breakdown of the average price increases approved for various health insurance providers:
- AIA Health Insurance: 5.98%
- NIB Health Funds Ltd: 5.47%
- Medibank Private Limited: 5.10%
- Hospitals Contribution Fund of Australia Ltd: 4.96%
- BUPA HI Pty Ltd: 4.80%
- Health Care Insurance Ltd: 4.53%
- Latrobe Health Services Limited: 4.53%
- ACA Health Benefits Fund Limited: 4.48%
- Mildura District Hospital Fund Ltd: 4.25%
- St Luke’s Medical and Hospital Benefits Association: 4.25%
- Reserve Bank Health Society Ltd: 4.13%
- Peoplecare Health Limited: 4.01%
- Australian Unity Health Limited: 3.98%
- Health Partners Limited: 3.94%
- Teachers Federation Health Ltd: 3.94%
- Cessnock District Health Benefits Fund Limited*: 3.92%
- Doctors’ Health Fund Pty Ltd: 3.67%
- Westfund Limited: 3.26%
- CBHS Corporate Health Pty Ltd: 3.25%
- CBHS Health Fund Limited: 3.25%
- Defence Health Limited: 2.99%
- National Health Benefits Australia Pty Ltd**: 2.96%
- Phoenix Health Fund Limited: 2.95%
- Navy Health Ltd: 2.88%
- Health Insurance Fund of Australia Limited: 2.60%
- Police Health Limited: 2.53%
- HBF Health Limited: 2.15%
- GMHBA Limited: 1.98%
The ongoing increases in private health insurance premiums underscore the importance for Australians to regularly review their policies and understand their coverage to avoid unexpected costs during times of need.
