Insurers pricing out Australians from quality private health insurance

New data analysis by Catholic Health Australia (CHA) reveals corporate health insurers are pricing Australians out of quality private health insurance amidst a cost-of-living crisis.

While the average indexation approved in the 2024 premium round was 3.03 per cent, data analysis of the major insurers shows some “Gold” products increased by more than 12 per cent between 2023 and 2024.

“Gold products give customers cover for essential services such as maternity and mental health. This dramatic increase is making it unaffordable for patients to access this level of insurance,” said Dr Katharine Bassett, Director of Health Policy.

“Despite these hikes, insurers are returning less to patients in terms of benefits, while private hospitals are struggling to remain viable.”

A new report by the Commonwealth Ombudsman has suggested insurers are also putting up prices by closing products and opening nearly identical ones in a practice known as phoenixing. This is a behaviour CHA highlighted in its recent submission to the government on the annual private health insurance premium round.

“Our analysis finds large increases in the same gold products over time. In addition to that, insurers are also using phoenixing to push up prices even further,” said Dr Bassett.

“With over 25,000 health insurance products available, the landscape is increasingly complex and confusing for consumers.”

Recent government data demonstrates that more Australians now hold Silver products than Gold products, undercutting the value of health insurance to the community.

CHA is calling for urgent reforms ahead of the 2025 annual private health insurance premium round, including:

• entrusting premium increases to an independent body, such as the Independent Health and Aged Care Pricing Authority, with a formalised approach to incorporating hospital cost data
• linking premium increases with the level of benefits paid in order to incentivise insurers to give back more to patients
• implementing a national private price, which would align price growth with the real costs of delivering care — similar to what occurs in the public sector.
• capping the capital reserve requirements for private health insurances to increase the flow of funding into the system

“The tactics being used by corporate insurers are nothing but smoke and mirrors, designed to confuse consumers while they profit. We need immediate action to ensure private health insurance remains affordable for all Australians,” said Dr Katharine Bassett.

Figure 1: Breakdown of hospital treatment policies by tier, June 2019 to December 2023.

Source: Department of Health and Aged Care (2024). Private health insurance reform data, 15 April 2024. Retrieved 18/11/2024 from: https://www.health.gov.au/resources/publications/private-health-insurance-reform-data-quarterly-trends-report?language=en