Paying a premium for price-rise pain
HEALTH fund premiums are about to have their lowest annual rise in 18 years — but it will still far exceed inflation by going up an average of 2.9 per cent.
And many members will lose benefits for procedures such as private births and hip or knee replacements.
The rise will cost a family about $130 and singles $60 a year and will be 50 per cent above the inflation rate.
This is even though many fund members will find their policies will be abolished, renamed or stripped of key benefits under reforms that will simplify health cover into four new bands — gold, silver, bronze and basic from April 1.
The Sunday Telegraph can reveal part of the reason health fund members are still paying premium rises above the inflation rate is they are paying more for hip and knee replacements than patients in the UK and New Zealand.
New research for private funds shows the gouge is adding about two per cent or $400 million a year to premiums. The research found makers of replacement hips and knees charge Australian insurers half as much again when compared to providers in UK or New Zealand.
It was thought this rort, which also affects implants to prevent heart attacks, had been stamped out in a 2017 agreement last year to cut prices by $1.1 billion over four years.
But research suggests that the cuts weren’t anywhere deep enough.
It affects all fund members, not just those who need a new knee or hip, because it shares out such costs.
For a family with top cover, paying $5000 a year for insurance, the impact can be as much as $100. A single paying $2500 annually is forking out an extra $50.
There is also a considerable cost of taxpayers via the 30 per cent private health insurance rebate.
Private Healthcare Australia CEO Dr Rachel David said: “Further reform of this sector is critical if it is going to remain safe and affordable.”
But Medical Technology Association of Australia CEO Ian Burgess denied there was a rort.
Mr Burgess said the industry had “single-handedly delivered, for consumers, the lowest increase to their health insurance premium in 17 years” earlier in 2018.
He said “the variations in the price of medical devices reflects the differing market environments, supply chains, economies of scale and contrasting reimbursement systems from country to country”.
Health funds need Health Minister Greg Hunt’s approval for their annual premium rises and The Sunday Telegraph has been told funds are under pressure to deliver an average rise below 3 per cent.
Labor has vowed to limit health fund premium rises to just two per cent a year for two years if it wins next year’s federal election.
Sydney mum Justene Gordon said it was frustrating that while salaries weren’t rising, health insurance and other costs were increasing by more than the inflation rate.
“It means you really have to make decisions about what is important, what we need to keep,” she said.
The family values its health insurance and has used it extensively to cover ear grommets, removal of children’s tonsils and a broken arm.
Mrs Gordon said she loves her job as a social worker but rising costs meant working was less of a choice and more of a necessity for her family to make ends meet so they could pay for choices about healthcare and schooling.
She was frustrated that the category changes may make it harder to afford a product that suits the family but said something needed to be done to simplify insurance.
Justene Gordon worries that changes will make private health unaffordable for children Torah, 6, Owen, 13, and Heath, 11.