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8% rise in health insurance "no surprise" to Catholic Health

Catholic Health Australia's Francis Sullivan has said that yesterday's announcement of an increase in health insurance premiums is the consequence of the Federal Government's election pledge to boost rebates for older Australians, and further rises are likely.

The increase was announced yesterday after it was approved by Federal Health Miniser Tony Abbott.

"Under the current arrangements there is nothing putting downward pressure on premium prices," said Mr Sullivan. "We can expect more of the same in future because benefits are outstripping premiums."

"It is fundamentally the result of a big draw on the system by older people, which was further encouraged by the Government in its election policy changes," he said, referring to the rise in the private health insurance rebate for older Australians.

The average rise of 7.96 per cent comes on top of increases of about 7.5 per cent in each of the two previous years, and was attributed in large part to the increasing use of private hospitals and higher treatment costs.

He said there was little he could do to rein in ballooning costs, other than instruct the Private Health Insurance Administration Council to monitor funds with high management expenses.

"These increases are the minimum necessary to maintain the solvency of the funds and ... the level of payments ... and that's why I've approved them," Mr Abbott said. "I'm not saying there won't be a lot of applications next year but let's hope that ... next year's applications are lower."

But experts did not share his optimism.

Health insurance premiums to rise (Sydney Morning Herald 3/3/05)

Catholic Health Australia
Private health premiums (Department of Health and Ageing 2/3/05)
Australian Health Insurance Association

Health jolt as fund premiums soar 8% (Sydney Morning Herald 3/3/05)
Families hit by health premium hike (The Advertiser 3/3/05)
Health insurance rise hits Victorians (The Age 3/3/05)

3 Mar 2005