Tips to avoid the squeeze of soaring health insurance

Health insurance premiums have soared - and it’s unlikely to stop.

Health insurance premiums have soared - and it’s unlikely to stop. Photo: TND/Getty

Australians are being hit with soaring premiums for their health insurance as big funds use “sneaky tactics” to hike prices, consumer group Choice says.

In a report published on Thursday, Choice analysed how health insurance prices have changed in recent years, and they found premiums on some policies rose by as much as 47 per cent.

That’s much higher than the average 8.6 per cent rise over the past three years, which is subject to federal government regulation that’s due to be updated in the next few weeks.

Choice health insurance expert Uta Mihm said big funds have increased prices far higher for people buying gold tier cover than the regulated caps – which is based on an average.

Gold plans offer comprehensive health cover for Australians with ongoing health conditions or they need major surgery in a private hospital.

“What health insurance is meant to do is relieve pressure on public hospitals,” Mihm said.

“We have people really looking for surgery that can’t get into the public system, or if they can they add to these really long wait times.

“If those people can’t afford [private] cover then health insurance can’t do what it’s meant to do.”

Choice has accused big brands – including Medibank, Bupa, NIB and HCF – of passing on huge premium hikes using “sneaky tactics” designed to squeeze people who take new cover.

For example, Mihm said insurers had closed gold tier policies then released new products with the same level of cover but with much higher premiums.

Customers with policies that insurers have stopped advertising are still suffering from double-digit increases in many cases, Mihm said, but new customers have faced the biggest rises.

Gold hospital policies at the five biggest funds rose between 34.4 per cent and 46.9 per cent between February 2021 and 2024, Choice found, including HBF, Medibank, NIB and Bupa.

The increases can occur at any time, rather than the once per year allowed because technically funds are releasing new products with slightly different names, Choice said.

Tips to ease the squeeze

First, review your existing cover and see whether it meets your current needs before renewing for another year. It may be worthwhile to downgrade to more affordable cover if you’re on a higher tier plan that’s subject to a big price increase, Choice said.

If you do need more comprehensive cover then don’t take whatever your current insurer offers you, but compare deals from other insurers to see if savings are available.

Mihm said Choice’s analysis has found that many smaller funds offer cheaper premiums for the same cover, and she encouraged people to look beyond the big health insurers.

“Health insurance is regulated by APRA, so if their policy is at a good price there is absolutely no problem with taking out a policy with them,” Mihm said of lesser-known brands.

There are a few other things you can do to save money on your health insurance; one tip is to pre-pay your bill either annually or months in advance.

Mihm said this will insulate you from annual price increases on your cover, which are likely to be substantial this year when the government makes a decision ahead of April.

Also be aware that switching is much easier than insurers make it out to be; you don’t need to serve a new waiting period when switching providers for comparable coverage levels.

The only waiting period you’ll need to serve is in areas where your level of cover changed.

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