Health insurance soars

Friday, 14. September 2018

Australian politics: full coverageAnalysis: Little evidence rebate has helped consumers

The Abbott government has approved the biggest increase in health insurance premiums in almost a decade, as it walks away from any early implementation of its election promise to scrap the means-testing of the 30 per cent rebate for health fund members.

In a pre-Christmas whammy for Australians grappling with spiralling health costs, the average family policy that includes ancillaries such as dental costs is likely to rise by more than $200 a year, thanks to the average 6.2 per cent increase for 2014 endorsed by Health Minister Peter Dutton.

For a basic family policy, the rise will be about $150 a year. Singles can expect to pay an extra $100 a year in premiums.

For all categories, the increase is almost triple the overall rate of inflation. The last time there was a bigger increase was in 2005, when premiums rose 7.96 per cent.

Among the top 10 most popular funds, the increases range from just under 3 per cent (Health Insurance Fund of Australia) and just under 8 per cent for NIB.

Mr Dutton blamed an 8 per cent increase in overall payouts by funds this year for the sharp rise. He said the former government should also be held responsible, noting health insurers had been ”constantly under attack”.

”There is no doubt this increase could have been lower had it not been for the pressures placed on the sector by Labor,” he said in a statement. However, Mr Dutton declined a request for an interview to explain those pressures.

The opposition spokeswoman on health, Catherine King, said the increase was a ”slap in the face” for consumers and had been pushed through just before Christmas in the hope that people would not notice because of the holidays.

”Making this announcement two days before Christmas is highly cynical and something the government should be ashamed of,” Ms King said.

The increase comes as the government weighs up when, and whether, to proceed with the scrapping of means-testing of the health insurance rebate.

Under measures that came into effect last year, singles earning about $88,000 and families earning more than $176,000 no longer get the full rebate. Singles earning more than $130,000 and families with an income of twice that amount, do not get a rebate at all.

During his election campaign launch this year, Prime Minister Tony Abbott said he would scrap the means-testing within a decade.

The mid-year economic and fiscal outlook predicted rolling budget deficits for a decade unless savings were found. Removing the means-testing of the rebate would cost almost $3 billion over the next four years.

The Consumer Health Forum of Australia said the government needed to look seriously at why health costs continued to vastly outpace inflation.

An ageing population, as well as the increase in the cost in doctors’ fees and equipment, did not adequately explain the surge, said spokesman Mark Metherell.

”Health costs have been going up more than inflation for more than a decade,” he said.

”We feel the whole issue should be examined. Premiums are going up. Out-of-pocket costs are going up. The average family will struggle to pay this increase.”

He said the performance and efficiency of health funds should be rewarded by government. At the moment, they were simply being compensated for the payouts they had made.

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