Lowest average PHI premium increase in two decades

20 Dec 2020Media Releases

Australian health funds have delivered the lowest premium increase in two decades, demonstrating an ongoing commitment to members during what has been a challenging year for consumers, industry and government. The average premium increase of 2.74% will come into effect on 1 April 2021.

Despite the COVID-19 restrictions, for the 12 months to September 2020, Australian health funds paid a record $22 billion in benefits on behalf of members for 90.3 million subsidised hospital and ancillary services.

In the year to September APRA reported that health funds’ “net margins fell to 2.1% (lowest since 2003) being the result of premium growth not keeping up with the rising costs of claims.”

“Health funds don’t want to increase premiums by a single dollar, but it is necessary to ensure health funds remain financially viable, meet statutory prudential requirements and most importantly, continue to be in a position to provide members with access to quality and timely healthcare,” said PHA Chief Executive Dr Rachel David.

“The only reason premiums go up at all is because health funds are paying for more healthcare.

“APRA data throughout 2020 has consistently shown there is no ‘windfall gain’ for Australian health funds as a result of COVID-19 restrictions.

“Health funds responded quickly and effectively to support their members during the COVID-19 pandemic and have either returned any savings to consumers already or are using them to fund the backlog of elective surgery.  Given the elective surgery shutdown, the private health sector has done an outstanding job to keep surgeries over the year to September at 93% of the rate of the previous twelve months.

“The value of our mixed private and public health system has been clearly demonstrated during the COVID-19 pandemic. It showed our capability to provide extra surge capacity while maintaining high quality and delivering a critical safety net for Australian governments as they navigated the response.

“Holding on to PHI has never been more important. Public hospital waiting times for elective surgery could exceed 1.5 years and some media reports suggest a 10 year wait for some procedures.

“Affordability, however, remains a key issue for members and health funds and we are working with the government on the next phase of PHI reforms to bring down costs and reduce waste which will in turn reduce pressure on premiums.

Key reforms that will go a long way to improving affordability and quality of care include:

  • Restoring the PHI rebate to 30% – it has been eroded to less than 25% – for low and middle Australians will make premiums more affordable for people who are paying for the cost of their own healthcare, as well as reducing pressure on our public hospitals. Of the 13.75 million Australians who rely on private health insurance about 93% (ATO) benefit from the PHI rebate. Almost half of the privately insured population have disposable incomes under $50,000.
  • Cutting red tape to allow funds to cover some treatments outside the hospital, particularly in mental health care. About 1 in 5 PHI claims for people under 30 are for mental health treatment and it is now the #1 leading cause of hospitalisation for women up to age 55.
  • Holding multinational medical device companies to account by bringing down the cost of inflated medical devices. The latest APRA data revealed that while prostheses utilisation was down -0.6% in the year to September 2020, benefits paid on behalf of health fund members increased by +0.5%.




Media Contact: Jen Eddy, 0439 240 755