Health Insurance Premiums To Soar By Up To $200 A Year
The Age
Wednesday February 27, 2002
Some people will have to pay at least $200 a year extra for their health insurance after the Federal Government approved premium price hikes averaging 6.9 per cent.
Thirty-one of the nation's 44 health funds will soon put up premiums, despite the record $794million profit the health insurance industry recorded last financial year and the boom in insurance coverage two years ago.
The average rise is more than double the inflation rate and comes despite the $2billion-plus spent by Canberra each year on the 30 per cent private health insurance rebate.
Federal Health Minister Kay Patterson announced the increases yesterday, and blamed them on an unexpected jump in demand for services and the rising costs of hospitals and nursing.
Cabinet had allowed the increases to ensure funds could meet a big jump in claims and in benefits paid to members, she said. The average family premium would jump by $2.66 per week, or $138.32 per year, she said.
The nation's leading insurer, the government-owned Medibank Private, will increase its premiums by an average 8.94 per cent.
Senator Patterson warned young Australians against dropping their insurance. ``Those people who drop out, especially if they're younger, will face the lifetime cover increases in cost, so they need to think very carefully about it," she said.
The price rises were condemned by the Opposition, the Australian Democrats and the Australian Consumers' Association.
Opposition health spokesman Stephen Smith seized on comments by former Health Minister Michael Wooldridge to accuse the government of misleading the community.
In July, 2000, Dr Wooldridge said that a surge in health insurance membership would ``keep real downward pressure on premiums". Mr Smith said of the increase: ``It's double the rate of inflation, it's very difficult if not impossible to justify increases of this order."
Nicola Ballenden, of the Australian Consumers' Association, said: ``We just find it hard to believe in an environment where health funds are getting an enormous subsidy from government, they have had an influx of new members and they have just announced record profits, that somehow premiums still have to go up."
The government has introduced various measures to boost health insurance coverage over recent years. The measures include a penalty system to encourage people to join before turning 30, a tax penalty on high-income earners without insurance and a 30 per cent rebate for all policyholders.
The incentives have produced results, with almost three million Australians joining a private health insurance fund in the first six months of 2000.
Not all major insurers are imposing large premium increases. HBA, which insures about 500,000 Victorians, will lift premiums by an average of 1.5per cent. Australian Unity will impose average increases of 3.8 per cent while the Geelong-based GMHBA will not lift premiums.
The managing director of Medibank Private, Mark Burrowes, said it was the first time the fund had increased rates in 34 months. ``Nobody likes to increase their prices but it is a fact of life that treatment costs are increasing at a rate greater than inflation," he said.
If people stood back and looked at the rises in context, Mr Burrowes said he hoped they would recognise that they were fair.
Mr Burrowes said Victorian customers with singles cover would face an increase ranging from ``almost zero" per week to $4 a week, or more than $200 a year.
Medibank Private, which will lift premium rates by an average 8.94 per cent from April 15, had originally sought a 13 per cent rise, a claim attacked by Prime Minister John Howard at the time as ``a bit rich".
The fund has urged its members not to inquire about the premium changes until they receive a letter in the coming weeks.
Meanwhile, health fund MBF said yesterday it remained confident its proposed merger with AXA Health would go ahead.
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© 2002 The Age
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