My premium is going up 7.03%. Turns out I’m getting off lightly.
I was today years old when I realised that even though the federal health minister announces the annual average health insurance premium rise every February – more or less – it’s not actually the government that is in control of that particular number.
Silly me thought that the minister announced the number and then insurance companies tailored their price rises to conform to that number.
Bwaaaahahahaha. What a goose am I.
Insurance companies tell the minister what their new premiums are going to be. The DoHDA boffins presumably work out the average and then the minister decides whether that’s a palatable number – read, “will this cost me votes?”
There’s a bit of a back and forth until both sides can tolerate the final number without puking and – ta-dah! – an announcement is made.
I got the letter from Medibank this week. The premium for my Gold tier cover is jumping from $414.80 per month to $443.95 a month from 1 April.
That’s a 7.03% increase, thanks very much. So much for the 4.41% average increase. All I can say is that somewhere there is a Medibank customer who is very happy with their lower-than-expected rise.
At least I hope there is.
CHOICE magazine this week released its analysis of the coming round of premium rises and it seems I’m getting off lightly.
HCF customers with a Gold-level policy are facing a 25% increase, Bupa – 12%, NIB – 11.65%, Medibank – 9.93%, and HBF – 7.89%.
And of course, protesting your premium hike by moving to a different insurer is fraught with danger – starting a new policy leaves consumers wide open to ending up worse off than before.
“The average increase to premiums of 4.41% is just that – an average,” said CHOICE health insurance expert Mark Blades.
“It’s useful for understanding how much taxpayers increasingly spend to subsidise health insurance – which is now at $7.9 billion – but it’s of very little use to consumers.
“Our research has found that there is a huge difference between the increases consumers will face, depending on the level of policy they hold.”
The cover for Gold policies across the largest five funds will rise in price by an average of 13.3%, according to CHOICE, while those on Basic, Bronze and Silver policies will face increases from 2.6% to 3.3% on average.
In NSW, often the most expensive state, the smallest increase to a Gold policy was by HBF at 7.9%. HBF customers in Western Australia, where HBF has its largest member base, will also cop the 7.9% increase.
I’m in Queensland, so hoorah.
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CHOICE also found that despite the average “government-approved” cumulative increase of 14.8% in the past five years, prices for Gold cover across the five biggest funds have actually increased by an obscene 71.1%.
“A single person in NSW comparing comprehensive Gold cover in 2022 from the largest five funds could find cover at $257/month, or $3080 a year. After the price rise in April, the same Gold cover will cost on average $439/month, or $5270 a year,” said CHOICE.
You don’t have to look far to discover what the insurance companies think of all this.
“Not our fault,” is the response, in summary, from Private Healthcare Australia, the peak body for most of the big insurers.
“Gold policies cover services such as inpatient mental health care, weight loss surgery, reproductive services, pregnancy and birth, and joint replacements, as well as other high-cost hospital treatments,” said PHA’s CEO Dr Rachel David, in the wake of the CHOICE report.
“These treatments are becoming more expensive to deliver each year, driven by rising hospital costs, advances in medical technology, and an ageing population that often requires more complex and longer periods of care and rehabilitation.”
It’s also the fault of the Morrison government which introduced the Gold, Silver, Bronze and Basic tiering system, apparently.
“The product tiering system was originally introduced to make it easier for consumers to pick a product that matched their needs and life stage, but over time this has had significant unintended consequences, particularly the inflation in Gold cover,” said Dr David.
“Gold policies have now become a catch-all for a very wide range of treatments, many that are used by a relatively small proportion of members. That makes these policies more expensive and less sustainable over time for insurers and consumers.
“In a nutshell, Gold hospital cover is now predominantly used by a group of people who know they are going to claim for high-cost services, which is highly inflationary.”
Mhmm. So patients who have the cheek to have complex medical needs and the foresight to be able to see what might be coming down the pipe are penalised for buying the only insurance that will work for them.
And then penalised again if they try to shop around for (a) the best product for their needs and/or (b) the best price.
Nice.
I get why young people who feel indestructible are dropping out, or not starting out in the first place. At this point, if you’re well and young and carefree, private health insurance feels like a luxury – discretionary spending at best.
Dr David, to her credit, is just doing her job, defending insurers to the hilt, even when everything says Greed is Good.
“We need a more flexible approach that allows insurers to design products that are better tailored to different life stages and health needs,” Dr David said.
“It’s time for a review of this policy and the sector is happy to work with the government and other stakeholders to determine viable options. Without reform, comprehensive cover will continue to become less affordable, and fewer Australians will be able to access the highest level of choice in their healthcare.
“Private health insurance premiums are directly linked to the cost of care. When hospital charges, medical equipment and staff wages increase, premium increases must follow,” she said.
“We support efforts to improve transparency and value in the system, including recent action by the Government to introduce more transparency to what specialist doctors are charging and what insurers contribute to the cost of care.”
Or, you know, pocket less profit, pour more into private hospitals and benefits for members.
But what do I know?
I’m off to get the stitches removed from the finger I mauled with powered secateurs last week when I went out to trim the roses. Never rage-garden. Sigh.