Health minister Greg Hunt has announced the lowest average annual increase in private health insurance premiums in 18 years.
The 3.25 per cent average increase, to take effect from 1 April next year, follows last year's increase of 3.95 per cent.
"This is the smallest change since 2001 and significantly lower than the 4.1 per cent inflation for medical and hospital services this year," said Mr Hunt.
Private Healthcare Australia chief executive Dr Rachel David said increasing healthcare costs and the higher utilisation of services contributed to rising concerns over affordability and the subsequent reform process.
“The reforms were developed over a two-year period by Government, health funds, private hospitals, medical specialists and allied health groups. Passed by the Parliament in September, the package of reforms is already starting to deliver results with this year’s premium increase lower than it would otherwise be,” said Dr David.
“No-one likes a premium increase, but it is necessary to ensure health funds remain financially viable, meet statutory prudential requirements and most importantly, continue to be in a position to provide members with access to quality healthcare.
“Affordability is an issue across the health system. Public hospitals were guaranteed an annual 6.5% capped funding increase until 2025 through the COAG process, in contrast to the average increase for PHI of 3.25%.”
“The average increase of 3.25 per cent represents the fifth consecutive year that premiums have fallen, and is an exceptional result for consumers, Government and insurers alike,” said Matthew Koce, CEO of Members Health, the peak body for 25 of Australia’s not-for-profit, member-owned and community-based health insurers.
According to Ian Burgess, CEO of the Medical Technology Association of Australia, “Today’s announcement delivers the lowest premium change in 18 years, which can be attributed to the $1.1 billion in savings from the medical device industry."
A number of insurers also confirmed plans to adopt some of the voluntary reforms, including the 10 per cent discount for 18 to 29 year-olds on hospital policies and regional and rural travel and accommodation benefits.
Medibank announced an average increase of 3.3 per cent. “Allowing our customers aged 18 to 29 years old to access the youth discount on hospital cover will result in lower premium increases for them. This is good news for our younger customers," said CEO Craig Drummond.
Bupa announced a 2.99 average premium increase and also confirmed plans to offer the aged-based discount.
“The increase in healthcare costs hasn’t gone away, but it’s not good enough to expect customers alone to keep absorbing these costs,” said the managing director of Bupa Health Insurance, Dr Dwayne Crombie.
“This lower increase means we will share some of that cost with our members, but we also continue the push for broader reform of the health system as every component has a role to play in keeping healthcare affordable for Australians."
nib Managing Director, Mark Fitzgibbon, said efforts to hold down claims inflation and keep premiums affordable has helped deliver its lowest average premium increase in 16 years of 3.38 per cent.
"This is the fifth consecutive year we've been able to deliver an average premium change lower than the previous year reflecting our ongoing focus on cost containment and inflation. Even more importantly, from 1 April next year we'll be able to offer discounts to new and existing members under the age of 30 and a higher excess option for all. So potentially, they could actually reduce their premium," he said.
HBF announced an increase of just 1.94 per cent.
CEO John Van Der Wielen said the modest increase was the result of an organisation-wide initiative to drive efficiencies and control costs.
“We will always remain a not-for-profit health fund, and our members will always be at the heart of our decision-making. But we are transforming the way we operate, so we can keep premium increases to an absolute minimum, while maintaining our promise of quality health insurance,” said Mr Van Der Wielen.
Shadow health minister Catherine King criticised the increase and restated Labor's plan to cap premium increases at 2 per cent for two years.
"We will also task the Productivity Commission with a sweeping review to identify long-term sustainable ways to bring down costs and improve quality," said Ms King.