April 21, 2024
Health

Health insurance: Millions of Australians are facing the biggest hike in premiums for years



By Jack Quail For Nca Newswire and Poppy Johnston And Andrew Brown For Australian Associated Press

00:38 05 Mar 2024, updated 00:41 05 Mar 2024



Almost 15 million Australians covered by private health insurance will see their premiums rise by more than 3 per cent in the largest increase in five years.

The price hike comes as Treasurer Jim Chalmers warns of a possible economic downturn, with warning signs in the retail sector sparking alarm in the government.

On Tuesday, the Albanese government approved an industry average health insurance premium increase of 3.03 per cent, effective April 1.

The decision comes after several months of negotiations, which prompted industry concerns that the decision was delayed until after a by-election in the the Victorian seat of Dunkley, which the Albanese government maintained despite voter discontent over the rising cost of living.

Health insurers are permitted to increase premiums annually, however the health minister must approve any rise.

Almost 15 million Australians covered by private health insurance will see their premiums rise by more than 3 per cent in the largest increase in five years
Health minister Mark Butler (pictured) said the annual premium increase outstripped the annual rate of wages growth and inflation, the benchmark for changes to social security payments

In December Health Minister Mark Butler blocked requests by the country’s 31 health insurers for increases of up to 6 per cent, forcing them to re-submit their proposals.

The insurers’ request was last blocked in 2019 by then-health minister Greg Hunter after which a 3.3 per cent increase was ultimately introduced.

Health insurance premiums have risen fairly modestly in recent years, climbing by 2.9 per cent in 2023, and by 2.7 per cent in both 2022 and 2021. 

Insurance premiums more broadly have risen markedly in the past few years, jumping more than 17 per cent in 2023, and have made a significant contribution to measure of consumer price growth. 

The annual premium increase, Mr Butler said, outstripped the annual rate of wages growth and inflation, the benchmark for changes to social security payments.

‘I wasn’t prepared to just tick and flick the claims of health insurers, as the opposition asked me to do,’ Mr Butler said.

‘I asked insurers to go back and sharpen their pencils and put forward a more reasonable offer for the 15 million Australians with private health insurance.’

It comes as the treasurer foreshadowed a weak end to the year for the national economy, saying warning signs were present in the retail sector.

National growth figures for the December quarter will be released on Wednesday, with some predicting GDP to have gone backwards for the last three months of 2023.

Economists expect a subdued read for the December quarter, especially after business inventories data from the Australian Bureau of Statistics on Monday fell by more than anticipated.

Businesses were found to be running down their inventories over the December quarter, recording a 1.7 per cent fall that was much softer than the flat result economists were predicting.

Jim Chalmers said the quarterly results were expected to be weak in line with global trends.

‘The December quarter was quite weak because people were running down their inventories rather than producing or acquiring more stock, that is often a bit of a warning sign about the economic conditions at the time,’ he told ABC TV on Tuesday.

‘There is enough around to trouble us about how the economy finished 2023.’

Health insurers are permitted to increase premiums annually, however the health minister must approve any rise
The price hike comes as Treasurer Jim Chalmers warns of a possible economic downturn, with warning signs in the retail sector sparking alarm in the government

However, there will be more economic indicators that feed into the growth result released on Tuesday, the balance of payments and government statistics, that economists use to firm up their forecasts.

Despite the forecasts for the quarter, Dr Chalmers said Australia was in a better position than similar economies, which had gone into recession during the same time period.

‘The December quarter in the Australian economy and indeed the global economy was quite weak. Remember, that was the quarter where we saw Japan and the UK both go into recession,’ he said.

‘We had an interest rate hike right in the middle of that December quarter, we had those persistent cost of living pressures that people are confronting in our communities and around our country.’

It comes as small business sales growth as tracked by Xero via its accounting software record averaged 5.1 per cent annually for the December quarter, down from 6.8 per cent in the September quarter.

Weakness was most pronounced in interest-rate sensitive industries, such as retail (sales lifted 1.2 per cent annually) and agriculture (sales fell four per cent annually).

Xero economist Louis Southall said multiple interest rate hikes and high inflation was weighing on household budgets.

‘And we can see a shift in the December data, particularly in the retail sector,’ she said.

The economist said conditions would likely remain challenging as interest rates stayed high and inflation remained above the central bank’s target.



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