In December 2020, the Federal Minister for Health announced that health insurance premiums would increase by an industry-weighted average of 2.74% on 1 April 2021. Let’s take a look at the history of private health insurance rate rises, and how it could impact your monthly bills.

What does a health insurance rate rise mean for me?

According to the Minister for Health, singles will pay an extra $59.28 per year on average for their health insurance following a 2.74% increase to premiums on 1 April 2021. In addition, families will pay an average of $126.88 more.*

However, the specific price change after a typical rate rise depends on your health insurer and the type of cover you hold. In fact, your premium might have gone up by more or less than the 2.74% weighted average.

Has the rate change been affected by COVID-19?

The COVID-19 pandemic led all Private Healthcare Australia member funds and other non-member funds (i.e. health insurers) to delay their annual rate rise by half a year. This was done to alleviate stress for Australians struggling financially during the pandemic. Many of the insurers who delayed the rate rise implemented this change in October 2020, although some elected to forgo the rate rise entirely.

Health insurers paid out $21.9 billion in benefit payouts for hospital and extras cover between September 2019 and September 2020,* ensuring many Australians continued to receive exemplary healthcare during a difficult time.

* Source: Private Healthcare Australia, Lowest average PHI premium increase in two decades (21/12/2020).

An image of Australia with arrows pointing upwards

Why should I have health insurance?

The value of health insurance remains more vital than ever, with benefits including:

  • avoiding public hospital waiting lists for future surgeries;
  • your choice of doctor; and
  • great-value extras (e.g. telehealth psychology consultations, dental check-ups).

Plus, you’ll have peace of mind that if something goes wrong for you (or your family), you’ll be well-positioned to get the care you need, as fast as possible.

Is your policy still suitable? Once your health insurer gets in touch about your rate increase, consider the following steps:

Compare health insurance

How will I know if my premium is changing?

Your health fund will notify you in writing about your premiums increasing, decreasing, or staying the same through the post, email or SMS. This way, you can check over any updated policy information and make an informed decision about what to do next.

Why did health insurance rates go up in previous years?

Before health funds can raise their premiums, they must submit their proposed increases to the Federal Government for approval. The Federal Government checks all the proposed increases to ensure they’re sustainable, fair and necessary. Some factors that lead to rate rises include:

These proposed changes are reviewed, and if the insurer can’t sufficiently justify why they need to increase their premiums, the proposal will be rejected.

As the health insurance premium rate rise is a weighted average, some health funds increase their prices more than others. This weighted average is based on changes to a health fund’s entire portfolio of policies; this means the cost of some policies may go up a substantial amount, some may increase slightly, some may not go up at all, and some could even decrease.

For example, in 2021, one provider is set to raise their premiums by as much as 5.47%, whereas another will raise theirs by as little as 0.50%.*

* Source: Department of Health, Average premium increases by insurer by year (updated 21/12/2020)

A brief history of private health insurance rate rises

For over 15 years, the Department of Health has approved private health insurance rate rises. Since 2012, health insurance has increased by an industry-weighted average of 43.59% in total (excluding any increase in 2021, for now).

This means if your health cover cost $1,040 to maintain in 2011 (i.e. $20 per week), and you haven’t changed policies in all that time, it will cost on average $1,634.60 following the 1 April 2021 increase.

Take a look to see how health insurance rates have changed over the past decade.

Finding a great value policy

With so many options available and differing levels of cover to choose between, it can be daunting to compare and find the most suitable policy for your needs. We take the stress out of the process by offering a free health insurance comparison service, where you can easily see if there’s an outstanding alternative to your existing policy.

Our health insurance professionals are here to help you find the value in your health insurance again.

Health insurance rate increase by year
Year of average private health insurance rate riseRate rise (%)*
20212.74%
2020 (delayed for many funds)2.92%
20193.25%
20183.95%
20174.84%
20165.59%
20156.18%
20146.20%
20135.60%
20125.06%
Total increase46.33%
* Industry average, as taken from health.gov.au

So, what are you waiting for?

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