This appeared last week:
The healthcare policies rising at more than double the average
Michael Smith Health editor
Mar 23, 2025 – 1.53pm
Private health insurers are slugging some top-tier policyholders with annual premium rises of up to 9 per cent, more than double Labor’s approved average, prompting Health Minister Mark Butler to seek fresh advice into whether funds are price gouging.
Major funds including Bupa, Medibank, HCF, and NIB have written to policyholders in the past fortnight advising them of premium hikes ranging from 7 per cent to 9.4 per cent on “gold” and “silver” policies from April 1, according to 14 letters sent by disgruntled policyholders to The Australian Financial Review.
This is well above the 3.7 per cent industry average approved by Butler last month and also higher than the average increases for individual insurers. Bupa’s average premium increase was 5.1 per cent, HCF’s 2.8 per cent, Medibank’s 4 per cent and NIB’s 5.8 per cent, according to government data.
While insurers are allowed to increase annual premiums more than the average because some policies rise more than others, Butler said he had asked the Health Department to advise him if insurers were price gouging customers following the latest premium round, the process that determines annual increases in policy prices.
“During the recent premium round, we scrutinised insurers on this to ensure they weren’t continuing to rip off customers in this way,” Butler said in response to questions from the Financial Review.
“I have been clear to insurers: we will continue to monitor this closely. If it continues to happen, then I will force them to stop.”
Labor has put healthcare at the centre of its federal election campaign as it seeks to lower the cost of medicines and doctor visits, although managing the rising cost of health insurance is more challenging.
In December, Butler called out the practice of funds retiring cheaper gold-tier products and replacing them with almost identical ones at a higher cost – which is called “phoenixing” – after it emerged some funds had increased the price of some top-tier products by 21 per cent in 2023 and 14 per cent in 2024.
Insurers say they are doing nothing wrong and some policies will increase more than others, reflecting the rising cost of providing healthcare services and medical devices and specialist fees. But they also admit that gold coverage is increasingly becoming unaffordable and more people are switching to lower-tier products.
“People are downgrading their health cover due to the cost-of-living crisis. Our data from health funds shows 216,000 policies were downgraded during the first half of 2024, meaning health insurers collected $52 million less in revenue last year,” said Rachel David, chief executive of industry body Private Healthcare Australia.
“When fewer people hold gold and silver cover, this increases the risk pool and costs for those tiers.”
People with top-end cover more likely to claim
She said there are bigger premium rises for more comprehensive cover such as silver and gold tiers because they cover the most expensive treatments in the system such as obstetrics, psychiatry, joint replacement surgery, and weight loss surgery.
People taking out those policies are more likely to make a claim than people with lower levels of cover. Insurers also do not want to encourage patients to shift in and out of gold policies just when they know they will use them, for example, if they are planning to have a baby.
Some policyholders say they feel insurers are trying to force them out of existing policies by jacking up the price.
“They just keep aggressively raising the cost of my policy, I assume to make me drop it. They told me I couldn’t change my existing policy such as dropping extras without moving onto a new plan,” said Julia, a healthy 54-year-old from Sydney’s inner west. Her Bupa gold policy is rising 8.8 per cent to $374 per month from April 1. When she joined in 2010, her policy cost $135.45 per month.
Mary, whose family silver policy with HCF is increasing 8.7 per cent to $433.88 per month, said her insurer singled out “significant out-of-contract payments” to private hospitals and higher fees to use public hospital beds in NSW as the reason for the increase.
Private hospitals, which are campaigning for profitable health funds to give them more funding as they struggle with soaring costs, slammed the above-average increases.
“If 8-9 per cent is the reality from the big end of town, it’s a massive gouge no one, including the minister, should be tolerating,” said Brett Heffernan, chief executive of the Australian Private Hospitals Association.
“Last year, the Commonwealth ombudsman lifted the lid on phoenix policies. This loophole-exploiting practice sees health insurers scrap existing products, replace them with near-identical services and sell them at a higher price. At the time, the minister asked the insurers to stop it. Clearly, a more strident response is necessary.”
A spokesman for the ombudsman said some policies would have a smaller percentage cost increase than others, but it would expect more complaints in coming months as members are notified of the rises.
Analysts said higher-than-average policy rises on existing policies are not unreasonable.
“For example, Bupa’s average rate increase is 5.1 per cent, but some policies within their product catalogue are actually decreasing in price under certain circumstances. This means that, conversely, some policies will see increases well beyond the 5.1 per cent average,” Chris Quinn, general manager of comparison site Health Deal, says.
“Gold-tier policies have seen substantial price increases. Many members require coverage for services like pregnancy and IVF for only a short period. Once they no longer need these benefits, they often opt for lower-tier policies. ”
For example, in Victoria, the most affordable pregnancy-inclusive policy for a single person is approximately $2895 per year. Given that specialist fees for pregnancy in Victoria average around $3600, with hospital costs adding another $6700, health funds must strike a balance between setting sustainable premiums and covering the higher likelihood of claims on comprehensive policies like gold.”
Here is the link:
I have to say the example at the bottom of this article really show what we are up against in getting the pricing of private health insurance right and fair for all parties!
Is seems to me this is a problem that is ripe for a total re-think to make cost and prices fair for both customer and insurer. I reckon this problem is one that occupies a good deal of Mr Butler’s time, as right now it does not seem sustainable.
What do you think?
David.
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