Lowest premium increase in 19 years

07 Dec 2019Media Releases

Australian health funds have delivered the lowest premium increase in 19 years, by creating efficiencies and using retained capital. The average premium increase of 2.92% will come into effect on 1 April 2020. This demonstrates that health funds are committed to providing value to their members and ensuring Australia’s successful mixed public/private health system is sustainable well into the future.

Premiums increase because funds are paying for more healthcare. 88% of the premium increases over the last decade are driven by claims expenditure growth. In terms of health expenditure, real growth averaged 3.9% per year in the decade to 2017-18. This is above general inflation, which currently sits at 1.7%. It is also worth noting that premiums do not increase because of profits. PHA represents for-profit and not-for-profit members. APRA confirmed that profits are not the primary drivers of rising premiums[1].

“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.

“Affordability is an issue across the health system. Public hospitals were guaranteed a 6.5% funding increase until 2025 through the COAG process, in contrast the average increase for PHI is 2.92%.

“Health funds understand that affordability and out-of-pocket costs are a major concern for consumers. The Government’s next phase of private health insurance reforms is underway. We will work with government and the health industry to advocate for changes that reduce the costs of healthcare, for the benefit of the 13.6 million Australians who have private health insurance.”

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

  • Holding multinational medical device companies to account by bringing down the cost of inflated medical devices
  • Cutting red tape to allow funds to cover some treatments outside the hospital, particularly in mental health care. This was also recommended by the Productivity Commission’s Draft Report into Mental Health[2] ; and
  • Reinstating the rebate to 30% for low- and middle-income earners.

“Having private health insurance means your choice of specialist and the timing of your procedure. You will have continuity of care with the same specialist throughout your treatment cycle. Private cover also means avoiding long public hospital wait lists, which are increasing across the country for elective surgery.

“More than 13.6 million Australians hold PHI and over half of them have disposable incomes under $50,000 per annum. Many of these are full pensioners and superannuants who are making considerable sacrifices to maintain their health insurance,” Dr David said.


Media contact: Jen Eddy, 0439 240 755 / Celia Moore, 0432 344 069

[1] https://www.afr.com/wealth/personal-finance/costs-not-profits-are-driving-health-premiums-apra-20180207-h0vakp

[2] https://www.pc.gov.au/inquiries/current/mental-health/draft