$150 hike for private health cover
By Misha Schubert
February 28, 2004
MILLIONS of families will be slugged an extra $150 a year for private health
insurance after federal Health Minister Tony Abbott gave the green light for
funds to raise premiums by an average 7.6per cent.

The increase - to take effect from April 1 - means consumers will be forced
to pay 22per cent - or about $450 - more this year than they did three years
ago for exactly the same cover.

Mr Abbott and the health funds defended the hike, saying it was essential to
keep the sector viable and cover mounting costs for private health services
for their members.

But Labor accused the Government of breaking a 2001 election pledge that its
private health policies would drive down premiums.

The latest rise comes at the start of an election year in which health will
be a hotly contested issue. The hike will cost an insured family an extra $3
a week, or $156 a year, on average.

Taxpayers will also be hit hard: it will cost the public purse an extra
$180million a year through the 30per cent private health rebate, which now
takes $2.5billion from the federal budget every year.

Mr Abbott said the increase was unavoidable, and denied it would result in
people dropping private health cover.

"The cost of repairing your car has gone up," he said, "the cost of insuring
your house has gone up, the cost of buying your groceries has gone up - why
should this product ... be the only product that never has an increase?"

But Labor health spokeswoman Julia Gillard claimed Prime Minister John
Howard had broken his 2001 election pledge that his private health policies
would result in "downward pressure" on premiums.

"Tony Abbott should be doing his job and putting pressure on private health
insurers to keep premiums down," she said.

Democrats health spokeswoman Lyn Allison said the increase - at three times
the rate of inflation - was proof the Government had failed to contain
costs.

Consumers Health Forum chairman Mitch Messer said the rise would be blow for
battling families.

"We were told premiums would come down, but they just keep rising," he said.
"And it's families on lower incomes who bear the brunt of continuous rises
like those we have seen in recent years."

But Gayle Ginnane, who heads industry regulator the Private Health Insurance
Administration Council, said the increases were needed to prevent the
nation's 44 health funds from collapsing.

"These are not-for-profit businesses by and large, so if they don't maintain
capital, they would fail - and no one wants an HIH in this industry."

Australian Health Insurance Association chief Russell Schneider said the
price hike was modest given the increases in the cost of private hospital
care and prosthetics such as hip replacements and heart stents. "You'd
hardly call it a savage increase," he said.

The nation's largest health fund, Medibank Private, won approval for an
8.95per cent increase this year, which managing director George Savvides
said was forced by the rocketing cost of care.

"Australians enjoy a world-class mixed healthcare system that provides
access to the latest medical treatments, drugs and appliances," he said.
"But the cost of keeping pace with the latest healthcare treatments
continues to rise."

Doctors Reform Society president Tim Woodruff said the increase would help a
"rich minority of Australians while the majority are left to the ailing
public hospital system".