Yahoo Finance Labor slams 3.25 per cent increases to private health insurance premiums
Private health insurance premiums are set to increase by an average 3.25 per cent from April next year and Labor is warning Australians will be forced to ditch their policies.
The increase is the lowest approved annual increase in 18 years, the Federal Minister for Health Greg Hunt noted, with the increase equating to an extra $2.35 a week for Australian families, or an additional $122.20 a year.
Along with the increases, the Coalition government has introduced reforms allowing insurers to offer younger Australians discounted premiums and improved mental health cover as well as additional benefits for Australians living in rural areas.
The government will also introduced a system designed to make it easier to compare insurance policies. Policies will be categorised as Gold, Silver, Bronze and Basic policies depending on their level and type of cover.
Labor slams the reforms
However, Labor has condemned the approved premium hikes.
“Already, Australians are downgrading or ditching their private health cover in record numbers in response to relentless price rises, soaring out-of-pocket costs and growing exclusions,” Labor health spokeswoman Catherine King told reporters today.
The Labor party has pledged to cap health insurance premium increases at 2 per cent.
‘People are increasingly feeling the pinch’
Private health insurance premiums have grown by just over 50 per cent between 2010 and 2016.
The most recent increases between 2017 and 2018 saw Australians pay an additional $834 million in insurance premiums, bringing the overall sum to $23.9 billin.
The rate of growth has also outpaced the rate of wage growth over the last five years, revealed the consumer watchdog, the ACCC in November.
In fact, the average wage has increased 11 per cent over the last five years, well below the 27 per cent increase in private health insurance premiums.
“People are increasingly feeling the pinch of private health premium increases and growing gap payments. In response, many are shifting to cheaper products with reduced coverage, and some are dropping their cover altogether,” ACCC Deputy Chair Delia Rickard said.
Young Australians are the fastest to ditch their cover; the number of policies held by 20-24-year-olds has fallen by 46,580 in the last five years, with Australians between 25 and 29 also offloading their policies in droves.
Growing number of older Australians increasing pressure on insurers
Announcing an average increase of 3.30 per cent from 1 April next year, Medibank CEO Craig Drummond acknowledged the challenges posed by premium hikes.
However, as Australia’s population grows increasingly top-heavy, insurers need to find ways to ensure coverage remains affordable, he added.
“Healthcare costs in Australia have been tracking at an average of 4.6 per cent above inflation each year over the past 10 years, largely driven by more frequent and more expensive hospital admissions and a population that is getting older. This has put real pressure on the health system – both public and private.
“That means we need to look at all parts of the health sector for long lasting opportunities to make the fundamental changes required to keep Australia’s health system a world leader.”
A good day for Medibank shares
Medibank Private Ltd (ASX:MPL) saw its share price momentarily climb 3 per cent higher on Hunt’s announcement, while the NIB Holdings Limited (ASX:NHF) also pushed up 1.5 per cent
Medibank closed up 1.69 per cent but NIB closed down 0.42 per cent.
– With AAP.
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