An ageing population and rising health care costs have been blamed for the rise.
It’s a multi-billion-dollar industry and the cost of running it keeps increasing.
And households will again be forced to pay more for private health insurance benefits.
But Health Minister Greg Hunt says this increase is modest, compared to previous years.
“Every dollar counts for young people and families, but by delivering the lowest change in 18 years, off the back of the biggest reform in a decade, we are ensuring that private health will be more affordable,” Mr Hunt says.
From April the 1, about 13 million people will face an average premium increase of 3.25 per cent.
For an individual, that’s an average of $1.14 extra per week, or about $60 a year.
Families are facing an increase of about $2.35 per week, more than $120 a year.
Rachel David is the CEO of industry group, Private Healthcare Australia.
Dr David says the price rise reflects an ageing population, and a growing number of claims being made by members. “We are paying for more health care, an additional 800,000 medical services, 75,000 hospital admissions and close to a million extra dental services over the last year,” says he.
As part of its changes, the government will introduce a tiered health cover system – classified as gold, silver, bronze or basic – giving consumers the option of choosing their level of coverage.
Insurers will also have the option of offering discounts to 18 to 29 year olds.
CEO of the Consumer Health Forum of Australia, Leanne Wells, says this is a welcome respite for people who spend thousands annually on private cover.
But she is keen to see measures introduced, to offset the burden on families. “The key issue also is the rising out-of-pocket costs that Australian health care consumers are facing. As a country, we pay around $30 billion out of our own pockets,” Ms Wells says.
And that continues to cause concern.
According to a recent report from the consumer monitor, the ACCC, in 2017-18, consumers paid about $23.9 billion in private health insurance premiums - a 3.6 per cent increase on the previous year.
In that period, health insurers paid $15.1 billion for hospital benefits and $5.2 billion for extras benefits.
The report also found people are continuing to abandon their private health cover.
Labor says if elected, it will hold an inquiry into the private health sector – something insurers and consumer groups welcome.