New Year Grudge Purchases

This January we’re going to look into the various ‘grudge purchases’ around different insurance products, such as car, home, health and even life to see how you might save time, money and worry in choosing what suits.

There are few certainties in life but it’s a fair bet that come April 1 your private health insurance premium will rise by far more than your income or other price rises.

The government will announce the actual figure soon, it was more than 6% last year, amidst a major review of a system which offers some 48,000 different policies!

With price hikes like that, and a widespread confusion about what sort of cover we actually have, it’s little surprise  500,000 people cancelled or downgraded their policies last year.

It’s worth getting your head around some of the very different submissions from the peak health consumer group and the insurers as they could cost or save you significantly.

The Consumers Health Forum wants to see a nationally standard and legislated health insurance product, it calls myCover, for basic hospital policies which all health funds would have to offer.

There would be a range of packages to cater for different life stages and there would be only be few excluded procedures  and standard excesses.

It would make the authorities’ constant plea for us to all ‘shop around’ a whole lot easier as it would be more realistic to compare the actual costs and value of policies.

The Forum also conducted a survey which found the respondents average annual costs for policies was $3,377 per year with just under $2000 for singles and over $4000 for families.

Additional out-of-pocket expenses, which we have dealt with before at the FiftyUp Club, amount to a tad more than $2000.

The Forum’s summary of the survey does not bode well for a system where just 38% of their respondents felt satisfied with their policies.

“…while people are choosing to take out private health insurance for apparently practical reasons, they do not appear to be receiving overall value for having insurance in the absence of a medical need.”

Meanwhile the whole $19 billion system only exists due to complex and costly regulation in the shape of various ‘carrots’ to encourage participation  such as the means-tested rebate now down effectively to 25% from 30%.

The more prominent ‘sticks’ are costs the consumer wears if they don’t take out cover and  earn over a threshold or are aged more than 30

For examples the industry body Private Healthcare Australia wants a key ‘stick’ the Medicare levy surcharge to increase from one per cent .

It’s the amount higher income earners are slugged if they don’t have a basic private cover for hospitals.

Due to all those the price increases it’s now just cheaper for someone on $90,000 to pay the surcharge than buy such a policy.

The ‘surcharge stick’, which was brought in to drive us into the system, is apparently losing its sting.

There are big changes afoot for private health insurance this year and it’s important the government hears from ‘ordinary people’ as much as lobby groups.

Please take a minute to fill out the quick survey and let us convey your voice to the decision makers before it is too late.