Health insurers want to hike prices. How far will Labor let them go?

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Inflation for the year to last September was 2.8 per cent, and wage growth for the year to September was 3.5 per cent.

Health insurers have renewed their pitch to lift premiums by between 5 and 6 per cent this year, but that would be unpalatable to the government because it would be the sharpest hike since 2016.

The average annual cost of hospital and extras cover for a single person under 36 is $3,261, and $4,249 for someone over 60, according to financial comparison website Canstar. With a 6 per cent hike, many consumers would face increases of about $200 or more.

Ben Harris, the policy director of peak body Private Health Australia, said private health funds wanted to work with the government to keep premiums as low as possible in a tough environment for consumers.

Harris said several circumstances were prompting them to push up premiums. “Health inflation has been running at about 5 or 6 per cent in the last 12 months,” he said.

“Costs have been increasing, and health funds have paid out rebates about 8 to 10 per cent higher than the year before, after a premium increase of about 3 per cent. We know hospital costs are increasing, and doctors have been increasing their fees as well.”

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But he said insurers also had a vested interest in keeping premiums low while people struggled with cost-of-living pressures, because companies did not want to lose customers.

Health insurance uptake has remained strong in Australia despite cost of living pressures, with membership growing in every quarter since 2020.

The government encourages Australians to take up private cover by charging people without health insurance a levy on their income once they earn more than $97,000.

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