Michael Edwards reported this story on Wednesday, March 2, 2016 12:23:44

KIM LANDERS: Private health insurance premiums are going up again and consumer health advocates say the rising costs are prompting many people to drop their coverage.



Dozens of private health funds have been given the green light by the Federal Government to raise their prices by an average of 5.6 per cent.



Consumer group Choice says since 2002, premiums have almost doubled, but it's also warning people to think twice before dropping their cover.



Michael Edwards has this report.



MICHAEL EDWARDS: Like many young professionals, Mary Joy has private health insurance.



MARY JOY: At the beginning of the year it was $138 for two of us every two weeks, and then I've just re-did it but it's still quite expensive. It's $125.



MICHAEL EDWARDS: Do you feel as though you get that value for money?



MARY JOY: I don't use it, my partner uses it but I guess, well no.



MICHAEL EDWARDS: Would you consider leaving private health insurance?



MARY JOY: I feel like it's a safety net for me. So, I like to have it just 'coz.



MICHAEL EDWARDS: Her friend Jessie also has private cover, and even though she pays a reduced rate, it still hurts her budget.



JESSIE: It's about $100 a month. I'm on one of the older plans so it's the cheapest possible one.



MICHAEL EDWARDS: Do you feel as though you get value for money?



JESSIE: No not really. I had a major surgery last year and that was basically, I negotiated with the surgeon to get the minimum rate.



However, if I didn't do that negotiation I would have paid a lot more even with private health insurance.



MICHAEL EDWARDS: According to the consumer group Choice, climbing premiums are resulting in more Australians opting out of private health cover.



TOM GODFREY: These increases are just like a drumbeat and there's a sense of helplessness. People don't think that they can do anything to mitigate that cost.



MICHAEL EDWARDS: Tom Godfrey is the spokesman for Choice. Half a million Australians dropped or downgraded their private health insurance in the last financial year.



And Tom Godfrey explains the other problem caused by premium hikes is people opting out of comprehensive policies and instead taking up cheaper ones that provide no hospital cover.



TOM GODFREY: Really you only need hospital cover to avoid a tax penalty and it helps you out when you need to go to hospital. But extras cover is different; it really works like a budgeting tool.



It's things like physio, chiro, dentistry, orthodontics, massages. And look, really, these things you can plan for and pay for out of your own pocket.



MICHAEL EDWARDS: If you don't have private health insurance you can pay more for Medicare.



The Medicare levy surcharge is imposed on those without private hospital cover who as singles earn less than 90,000 or a combined income of $180,000 a year.



It can reach 1.5 per cent for those on higher incomes.



The Consumer Health Forum says policy changes could help lower private premium costs.



Mark Metherell is the forum's communications director.



MARK METHERELL: What we would like to see at Consumer Health Forum is a longer term approach and that would involve using the health insurance rebate to drive more consumer-friendly policies - policies that can be easily compared from one fund to another, that are simple, comprehensive.



We think that if funds don't meet those sorts of standards that policy should not qualify for the health insurance rebate.



MICHAEL EDWARDS: But the peak body representing health insurers says the overall number of people taking out private cover is actually increasing.



And Dr Rachel David, the chief executive of Private Healthcare Australia, says the industry does all it can to keep premiums down.



RACHEL DAVID: We understand that no-one likes to see costs go up. However, health costs are going up at rates much higher than inflation and they're not within the control of health funds.



MICHAEL EDWARDS: Is it not going to reach a point where it's just not economically sustainable for most people to join up to private health insurance?



RACHEL DAVID: We are concerned about that as the Federal Government, so we're actually working on a number of ways with the Federal Health minister on keeping private health insurance affordable, and we're making very good progress with those measurers.



KIM LANDERS: That's Dr Rachel David, the chief executive of Private Healthcare Australia, ending that report from Michael Edwards.