FINANCIALLY strained families will be hit with a health premium rise double the rate of inflation, despite insurers brokering the lowest hike in 15 years.
The April 1 increase will add around $200 a year to a family's health insurance bills.
However, the hike could have been far greater had health funds not benefited from cuts
to the cost of medical devices like hip and knee replacements and a reduction in the number of payouts.
The last time health fund premiums rose by less than four per cent was 2001 following the introduction of a 30 per cent government tax rebate that dramatically lowered premiums.
In that year, premiums did not rise at all. The following year they rose 6.9 per cent and the average rise has been 5.9 per cent since then.
The slowing in premium hikes follows last year's government health fund reform package
which included a $1 billion cut to hip and knee replacements.
And after health funds announced $1.4 billion in profits last financial year, dragging in 4.3 per cent extra premium revenue while their benefit payouts only rose by 3.7 per cent.
"I've been for pushing for the lowest possible premiums and have made this crystal clear to the sector," Health Minister Greg Hunt told News Corp on Tuesday.
"At this stage we are on track for the lowest health fund change in 15 years," he said.
"One of the ways we're doing this is by reducing costs for health insurers - which would otherwise be passed on through higher premiums."
Minister Hunt will have to announce the premium rise before mid February and health fund sources said Minister Hunt is pressuring them to bring in an average premium rise under four per cent.
After receiving the funds' annual premium rise bids late last year, the minister asked many funds to reassess and lower the rises they were seeking.
Private Healthcare Australia chief Rachel David says she does not know what this year's average premium rise will be but thinks after the reforms "at the moment it would be on track to be under four per cent".
Last year Medibank chef and BUPA chief Craig Drummond and BUPA chief Dwayne Crombie said a premium rise of just 3.9 per cent would be a "stretch".
Mr Crombie told News Corp any premium rise of under four per cent this year would be a one off unless the government embarked on further major reform of the private health system in a way that slashed costs.
Health fund membership began to decline in 2015 from a peak of 47.4 per cent of the population to 45.8 per cent in September 2018.
And the gap payments health fund members face when they use a surgeon in a private hospital have soared nearly 20 per cent.
This is due to the government's four year freeze on Medicare rebates which have remained at 2014 levels while surgeons and specialists raise their fees in line with inflation.
News Corp reported last year investment adviser Morgan Stanley was telling its clients the public hospital system is now so good Australians can get away with not joining a health fund.
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