Health insurance cost escalating fast
The cost of having health insurance is still rising faster than inflation, with private health premiums growing 5.3 per cent in 2012.
The silver lining for cash-strapped households was that health insurance payouts kept pace with the percentage rise in premiums, after a period when premiums rose much faster than payouts.
Industry body the Health Funds Association says health insurers paid $876 million in claims in the year to December 2012, up $44m on 2011.
In return, people paid premiums totalling $1.09 billion, up 5.2 per cent or $55 million from 2011.
In the year ending October, premium hikes outstripped the annual rise in payouts - rising 6.2 per cent to claims’ 4.8 per cent - which the industry blamed on having to play catch-up with spiralling claims costs.
Association chief executive Roger Styles said actuaries had for years underestimated how much claims would cost. But recent forecasts had been more accurate.
‘‘In the last 5-6 years they were consistently underestimating so I think you had premium catch-up where premiums had to rise ahead of claims inflation,’’ he said.
He stressed he was not criticising actuaries, whom he said could not have been expected to predict such cost-hiking changes as the shift in ACC’s policy on elective surgery for ‘‘wear and tear’’.
The change pushed more claims into private insurers, he said.
New technology has helped contribute to soaring medical inflation in the past two decades.
Styles said the rise in the cost of medical treatment had slowed last year after going up on average by about nine per cent a year since 2005.
At the same time a recovering economy and growing uncertainty about public health cover helped stem the loss of health insurance customers, he said.
The number of people with health insurance dropped just 0.1 per cent for the December 2012 quarter, although it was down 0.8 per cent for the year.