Why did my private health insurance premium go up?
We get answers to the hard questions about premium pricing
Millions of Australians have received notice that their private health cover premium is increasing from 1 November 2022 and the question on everyone's lips is 'why?'
For those of you who have held private health insurance for a while, you might recall that the premium increase usually takes place in April each year. However, we understand the financial strains Aussies have been under over the last year with all of us still feeling the impacts of COVID-19 which is why nib opted to postpone the annual increase for seven months. This was to ensure our members could continue accessing essential health services without adding to any financial pressure. Visit our article, health insurance premium changes for more information.
At nib, we're passionate about giving our members the best value for money, so when it comes to changing your premium, we’ve done everything we can to keep it as low as possible. But we do understand you probably have some questions about why there’s an increase at all. So, we spoke with experts across nib to find out why health insurers change their prices and what we’re doing to keep nib cover affordable.
Why is my premium increasing?
The cost of healthcare is increasing
The first reason is inflation, which is the sustained increase in the price of general goods and services. For example, that soy latte you bought for $4.20 in 2012 is probably selling for closer to $6 now, your electricity bill has gone up and the car insurance that once cost you $700 is now charging you $799.
It's not just you and nib affected by inflation, it's everyone from doctors and nurses to physios and dietitians. Because health providers have to pay more money for things like medical equipment, medication and staff (as well as rent, electricity, etc.), they may need to increase the prices that they charge for their service.
To break things down into a real-life example; in financial year 2012, the average amount of benefits that nib paid per hospital episode was $2,247. By financial year 2022, this figure rose to $3,358, which is an increase of more than 49% in only ten years. Therefore, the amount we pay providers to keep you at your healthiest is constantly rising.
More people are claiming
Australia’s ageing population coupled with a rise in chronic conditions such as heart disease and diabetes means more and more Australians are using healthcare services. With trends set to continue, more pressure is put on the healthcare system and claims made through private health insurance.
Throughout financial year 2022, nib funded 375,000 hospital admissions and more than 3.6 million ancillary and dental visits for our members and that's exactly why we are here – so you can access and afford quality healthcare when you need it most. The total amount of benefits we paid out for financial year 2022 was a huge $2.1 billion. That’s a 4% increase from the previous year.
Hospital cover premium changes reflect the rising cost of keeping our members healthy. However, we’ve worked hard to keep our price change as low as possible to help address affordability.
Will the price go up again?
It is difficult to predict any future premium increases as this is largely dependent on claims expenditure and any relevant government incentives and reforms. Because the health industry is heavily regulated, the Federal Minister for Health must approve any changes to your premium – and that generally only happens every April. So, you won't see any other price changes until April, 2023.
In 2022, nib worked hard to offer our members the lowest premium increase in 20 years. This year, nib’s average increase is 2.66%1 which is below the 2.7% average industry increase2.
What is nib doing to minimise the increase?
Focusing on getting our members better, before they get sick
We know that no one enjoys going to hospital, so we’re committed to giving eligible nib members access to a range of Health Management programs that are delivered by qualified health professionals and can be tailored to your specific health concern – from weight management to mental wellbeing.
These intervention programs aim to help at-risk Aussies get healthy before they need to visit hospital. They are available at no additional cost to eligible members with hospital cover who've served their waiting periods3.
Negotiating with hospitals for fair fees
nib has agreements with most private hospitals and day facilities across Australia and we’re negotiating new contracts regularly. These agreements limit the fees that nib will be charged on your behalf by hospitals for an admission to hospital. They also limit the out-of-pocket expenses you may be required to pay when you need to go to hospital.
We work hard to eliminate any out-of-pocket expenses for nib members, which is why we have nib MediGap. When a specialist chooses to participate in MediGap, it means they’ve agreed to accept a higher benefit from nib as full payment for service – and not to charge you an out-of-pocket expense. You can find out more about nib MediGap online.
Giving our members access to even more affordable health providers
At nib, we want our members to be as healthy as possible, which is why we work closely with health providers across the country as part of our nib First Choice network. The First Choice Network is a community of dentists, optometrists and physiotherapists who’ve promised they will deliver quality care and value for money to our members. We negotiate and lock in lower costs with each of our First Choice providers, meaning you can rest easy knowing you’re in the hands of a health professional who’ll charge you a competitive fee for commonly claimed treatments.
How can I save?
If you’re looking for ways to reduce the price of your health insurance premium, a few small changes can make a big difference. For tips on how to reduce the cost of your premium, check out our guide to saving money on your health insurance cover.
1Averages are not indicative of what every customer may experience, and some products may offer either a lower or higher increase. Excludes any adjustment for the Australian Government Rebate.
2Industry average provided by the Department of Health.
3 Available to eligible nib members who’ve held Hospital Cover for 12 months and served their relevant waiting periods. Additional criteria vary according to each program.