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Private health premiums.



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Media Release

The Hon Tony Abbott MHR Minister for Health and Ageing

2 March 2005

Private health premiums

Increases in private health insurance premiums are due to the increasing use of private hospitals as well as to higher health costs, says the Ministers for Health and Ageing.

Increases in private health insurance premiums are due to the increasing use of private hospitals as well as to higher health costs. Of course, every patient treated in a private hospital is one less patient on a public hospital waiting list.

In 2003-04, private health funds paid total benefits to members of $7.6 billion, an increase of 8.2 per cent over 2002-03.

Hospital benefits payments increased by 9.6 per cent, reflecting cost growth of over 6 per cent and growth of over 3 per cent in the number of services covered on the previous year. Gap payments to doctors increased by 19.2 per cent over the past year, and benefits paid for prostheses (such as heart stents, pacemakers and joint replacements) increased by 18.7 per cent. Ancillary benefits increased by 3.4 per cent, mostly due to utilisation growth of more than 3 per cent.

Although the average premium increase is just under 8 per cent (7.96 per cent), I’m advised that almost 85 per cent of policy holders should face premium increases at or below that rate.

These rate applications have been scrutinised very carefully by the Private Health Insurance Administration Council and by the Department of Health and Ageing. I am satisfied that they are no more than required to meet expected payments to members and to maintain capital adequacy.

The Australian Government Actuary was also asked to give a second opinion on some funds and, in one case, further advice was sought from the Actuary before the proposed premium increase was allowed.

I have asked PHIAC to monitor funds with high management expenses and well above average premium increases.

Although no one likes premium increases, these are necessary to maintain high-quality, dependable private health services.

Thanks to Lifetime Health Cover, the private health insurance rebate and no (or known) gap schemes, private health insurance is a much better product than it was. I am encouraging funds, hospitals and doctors to work together to make it better value for money in the future.

Media Contact: Claire Kimball, 0413 486 926