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Private health premiums went up in April

The lowest increase in 20 years - but still above the rate of inflation.

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Last updated: 01 July 2021
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Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • Health insurance premiums went up on 1 April
  • The average increase was 2.74%, although some funds increased prices more, including most large insurers
  • The health insurance rebate also decreased, driving prices up further

Health insurance premiums increased on 1 April 2021, and for most people, this was the second increase in six months after many insurers delayed their 2020 increases until October.

At 2.74% on average, this was the lowest increase since 2001. Some funds had bigger price hikes than others: the lowest increase was 0.5%, while one fund had a 5.47% price rise. Most of the big insurers had above-average increases.

Your health fund lets you know your policy's actual increase early in the year, before the increase takes effect. If you can afford to pre-pay a full year's premium, you can do that before April to lock in 12 months of cover at that year's prices.

Health insurance costs are growing faster than inflation

Despite the lowest increase in two decades, health insurance premiums are still growing quicker than wages or inflation, raising concerns that affordability is spiraling out of control.

"This year's premium price hike made people question their need for expensive health insurance," says CHOICE senior campaigner Dean Price.

"This increase was the second increase in most people's private health insurance premium in six months. The average increase may be lower than other years but people should check how much their specific policy went up as it will vary. Some funds had average increases of up to 5.47%."

Premiums have increased by 57% in the last decade, while the consumer price index (a measure of inflation) grew only 20%.

"The federal government needs to take real action to address issues that industry is unwilling or unable to fix themselves – we need a full review of the private health system," says Price.

"People can shop around and lock in a price if they pre-pay before 1 April each year, but that is a short-term solution when people have been crying out for real action on price and value."

Rebate cuts mean the price hike is bigger than it looks

While the average premium increase gets a lot of attention, your premium increased on April 1 for another reason: a reduction in the private health insurance rebate.

This year it dropped by about half a percentage point, to 24.6% for under 65s on the base tier income. Older people and wealthy households will receive different rebate amounts.

The rebate amount decreases every year on the same day premiums go up. It was frozen for 12 months at the beginning of 2020 due to the pandemic.

The actual size of the cut is determined by how much premiums increase compared to the rate of inflation: the bigger the difference, the more the rebate goes down.

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