A proposed 5 per cent rise in health insurance premiums would be more than twice the rate of inflation.
Source: National Features
Federal Health Minister Tanya Plibersek has to approve the rises. Picture: Ray Strange Source: The Daily Telegraph
HEALTH insurance could be pushed out of reach for many people with health funds set to lift premiums by $150 a year.
The rise is expected from next April, with industry sources warning the government will be asked to approve premium increases of at least 5 per cent.
Health funds must submit applications for a premium rise to the government by tomorrow and say it is hard to see how the rise could be lower than 5 per cent given private health inflation is 9 per cent. A 5 per cent rise would add about $150 a year to a $3000 family policy and $75 to the cost of a $1500 single's policy.
The rises follow a Sunday Telegraph report which told of seriously ill patients being forced to sell their homes to fund ever-increasing treatment costs.
Rises would make health insurance simply too expensive for many people, Consumers Health Forum chief Carol Bennett said.
Before Health Minister Tanya Plibersek approved the rise, it was important she considered the totality of the costs facing families, she added.
Next year's premium rise will be crucial because it will become the baseline premium for a major policy change in 2014, when the government will cease increasing the 30 per cent private health insurance tax rebate in line with health fund premium rises.
Last month the government announced from 2014 it would only increase the rebate in line with inflation, to save $700 million over three years.
The policy change will gradually erode the value of the private health insurance rebate and increase out-of-pocket expenses for consumers, meaning 10 million people will pay between $15 and $30 a year more for their health cover from 2014.
The proposed 5 per cent rise will be more than twice the rate of inflation.
In the year to September the consumer price index rose by just 2 per cent.
Health funds, however, argue health inflation is running well above general inflation.
From next year the government will also axe the 30 per cent subsidy that currently applies to lifetime health cover penalties for those who delay taking out private health insurance until after age 30, saving a further $390 million.
This is likely to cost someone on the maximum 70 per cent penalty about $525 a year.
In recent years health ministers have asked many health funds to rework applications for a premium rise to try to hold down costs.
Industry sources question whether the government should continue to have any role approving premium rises now that it plans to only increase the 30 per cent rebate by the inflation rate.
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