The federal government has authorised a rise in private health insurance premiums that will cost families an extra $126 a year on average.
The 2.74 percent annual increase will take effect from April and builds on rises of 2.92 percent this year and 3.25 percent in 2019.
Almost 14 million Australians will be impacted by the cost increase.
A single person will pay an extra $1.14 per week, and a family will pay $2.44 more a week.
But Health Minister Greg Hunt says it’s the lowest annual average premium increase in 20 years.
“Australian government reforms mean private health insurance will continue to offer Australian families affordable choice and flexibility in their health care,” his office said in a statement on Monday.
Opposition health spokesman Chris Bowen said the confirmation of the 2021 increase was a blow for families, especially given some funds were likely to impose higher premiums.
“Hunt’s hike is well above projected inflation, and will cost families an extra $126 on average,” he said.
Mr Bowen also noted the competition watchdog recently found insurers had paid out $500 million less in benefits due to COVID-19 measures restricting access to some treatments.
“With premiums soaring and (welfare) benefits falling, it’s no wonder that health insurance coverage is already at its lowest level in decades – and today’s announcement will only add to the pressure,” he said.
The Consumers Health Forum of Australia also lamented that the increase was well beyond inflation.
“Family and personal budgets are under even more strain and the need for care in areas including mental health continues to grow,” CEO Leanne Wells said in a statement.
“While the new rise is low compared to previous years… there are unlikely to be many people able to absorb a premium increase without further squeezing their budgets.”
Three of the major health insurance providers have taken their increases even higher – NIB will lift premiums by 4.36 percent, Bupa by 3.21 percent, and Medibank by 3.25 percent.
“Premium changes are never welcomed but the reality is that the cost of medical treatment continues to rise well above inflation,” NIB managing director Mark Fitzgibbon said.
Medibank chief customer officer David Koczkar also defended the health fund’s price surge, saying private health insurance had weathered an increased burden during the pandemic.
“Despite the fact that we continue to pay more for health costs, because as a community we are getting older and going to the hospital more, Medibank is working hard to ensure that private health insurance remains affordable,” he said.
But the Medical Technology Association of Australia said private health insurers were fleecing consumers and could cut premiums by 20 per cent.
Their research indicates 2.2 million Australians have dropped their private health insurance in the past five years, largely due to rising costs, chief executive Ian Burgess said.
“We believe this will continue as the 11 million Australians that are still covered by private health insurance will see the cost of their policies set to increase by $50-$300+ in 2021.”
The government returns about $6.3 billion to private health insurance holders through the private health insurance rebate scheme.
In 2019/20, Australians received a record $21.9 billion in benefits for medical services through the private health system, according to the government.