Private health insurance premiums will increase by an average of 3.73% on April 1, health minister Mark Butler announced.
Marking the biggest premium hike in seven years, this change will affect around 15 million Australians currently holding private health insurance policies.
The premium hike comes despite the minister requesting that insurers resubmit their proposed increases three times before settling on the final rate. While below the 4% inflation rate in the health sector, this increase exceeds last year's 3.03% rise and is approaching the 3.95% increase seen in 2018.
Analysts warn that the increase could drive many Australians to reconsider their coverage options. Research from iSelect indicates that as many as 28% of policyholders are considering canceling, downgrading, or switching their policies in response to the price rise.
"Private health insurance is the second biggest concern for seniors, behind cost of living," said Chris Grice, CEO of National Seniors Australia. "While most people need private health, rising premiums and out-of-pocket costs significantly undermine its value. As insurers and specialists point the finger at each other, seniors are left caught in the crossfire."
The financial impact will vary across age groups according to data compiled by comparison site Canstar:
Individual insurers announced varying increases, with nib implementing one of the highest at 5.79%, while HBF will implement a more modest 2.8% average increase.
"Consumers haven't had fair warning, and many will be forced to scramble to compare policies, switch providers, or find a better deal before the hike kicks in," said Chris Whitelaw, Money.com.au's health insurance general manager.
Financial experts encourage consumers to review their policies before the April 1 implementation date. Compare the Market executive director David Koch said that while premium increases help cover rising healthcare costs, consumers should ensure they're not paying for unnecessary extras.
Health consumer advocates are calling for an independent review of the private health insurance system to address ongoing affordability issues, particularly for older Australians who depend heavily on healthcare services but may be forced to drop coverage due to rising costs.
The government has advised policyholders to shop around for better deals, particularly if their individual premium increase exceeds the 3.73% national average.
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