If you’ve seen the news over the past week, you’ll notice a frenzy of reports about yet another rate rise for health insurance premiums coming . The Health Minister has once again demanded more transparency from health funds while most consumers just resign to apathy. This has become a perennial event for the approximately 13 million Australians with private health insurance.
But the annual rate rise is not necessarily a bad time for consumers.
The private health insurance rate rise represents an alarm clock for all to consider the true value of their cover. Situations change and many Australians don’t realise they could have a better arrangement. Are you planning for a baby, playing sport again, recently retired? Paying for extras but haven’t claimed anything in the last 12 months? Time to be curious.
Taking a few minutes to compare your health insurance during the month of March is a great idea, says Choosewell MD Andrew Davis.
“Whether the average goes up 5% or 7% each year, it’ll still hurt. What matters more is that over time people’s circumstances and requirements change, and products change. The relative pricing of health funds also changes. So it’s important that people make sure what they’ve got is what they need and they’re insured by the fund that offers them the best price for the cover they need.”
Recent reports in the media have indicated that there will be a 5.59% rate rise across private health fund premiums from – an average figure that says little to consumers and is more useful for selling newspapers than anything else. Some products will see no rise at all, while others could rise by significantly more than the average. Without performing a proper product comparison across different funds, most consumers never know if they’ve got the best deal for their needs.
“The cover your children need when they’re 13 years old and require orthodontics (braces) is unlikely to be the same cover needed once the braces are off.”
Mr Davis iterates that the market has come from a place where very few people switched or compared between funds. Most just followed their parents’ choice and didn’t realise that another fund may have a product that better suits their needs and is cheaper overall.
Members of Medibank Private and Bupa – the two largest providers in Australia – have seen some of the biggest increases at 5% and 6% respectively, above the average of the top 7 funds. This could be due to the aging membership who are using more services, which in turn will drive up premiums for younger members who claim very little. Profit and shareholder returns can also be a driver for many funds.
“Health insurance has not been very consumer-centric. Some funds don’t want people to compare providers because they’ve relied on lifetime members for so long. These ‘set and forget’ customers can carry a lot of resentment.”
The annual 6%-ish rate rise is likely to remain as a recurring event for Australian health insurance premiums in the short term. The rising cost of health services, Australia’s aging population using more services and the high cost for expensive services like prosthetics is making health care one of the fastest growing costs for Australians.
“When the premiums become prohibitive members drop out altogether or drop their level of cover. We often hear from seniors who are paying to have pregnancy but might not be covered for a hip replacement. We can help them to get a cover that’s better for their needs, often at a lower premium.”
So if you haven’t had a look at your health insurance for a while, it pays to be curious about your health insurance this March.
Choosewell Pty Ltd is an Australian health insurance comparison service. Based in Melbourne, our experienced team of 60 advisors save you time, money and hassle by helping you compare a selection of appropriate health insurance policies.
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