Millions of Aussies plan to ditch their health insurance in 2022 as costs soar for private cover.
Health insurance costs have skyrocketed in the past two decades, increasing by 195 per cent since 2000.
That’s more than double the rate of inflation over the same period (69 per cent), according to Finder data.
The increase has added almost $2,000 annually to an equivalent $1,000-a-year policy taken out in 2000.
Tim Bennett, health insurance expert at Finder, expected health insurance to keep getting more expensive.
“Over the past year, insurers’ profits have more than doubled while the number of claims decreased,” Bennett said.
“For many, this raises the dilemma of whether to switch or ditch their policy.”
Bennett said insurance premiums rose every year to keep up with inflation, but insurers also tended to argue they needed to cover the cost of wages, new technology, and rising rates of chronic disease.
“This is why we’re seeing prices rise faster than inflation,” he said.
With rising costs of living putting pressure on household budgets, it’s probably not surprising that one in seven Australian adults won’t renew their health insurance this year, according to a survey done by the comparison website.
From a nationally representative audience of 1,003 Australians, 15 per cent responded with no, which is equivalent to around 2.9 million Aussies.
When health insurance is worth it
While private health insurance is not for everyone, it may make sense for some people.
If you are single and earn over $90,000 a year, or in a couple and earn more than $180,000 a year, private health cover may be a good idea.
That’s because if you remain uncovered, you will wear a penalty in the form of the Medicare Levy Surcharge, of up to 1.5 per cent of your taxable income.
Bennett recommended shopping around to get the best deal.
“The major health insurance funds have delayed their price increases from April to around October this year, which gives consumers more time to shop around and switch their policy,” Bennett said.
There are also a couple of ways to squeeze the most value out of your existing coverage, such as tapping into services you may not realise are covered.