The consumer advocacy group found the price of top-level and ‘Gold’ hospital policies have skyrocketed by over 30 per cent on average over the past three years.

The figure is more than triple the approved average 8.6 per cent increase to premiums reported by the Department of Health and Aged Care over the same period.

“Health insurers are using sneaky tactics to inflate prices for people who need health insurance for things such as surgery, management of chronic pain, or end-of-life care,” Choice health insurance expert Jodi Bird said in a statement.

“Often these are the people who can least afford higher premiums.”

The claims of sneaky tactics have been rejected by the CEO of Private Healthcare Australia, the peak body that represents 21 funds. It says inflation is to blame.

The report found HBF, Medibank, NIB, Bupa and HCF have increased their top-tier premiums by 34 to 47 per cent over the past three years, after comparing policies in NSW and WA.

Choice health insurance expert Uta Mihm said a family in NSW who paid on average $5,380 for a Gold hospital policy (with a $750 excess) per year in 2021, now pays a whopping $7,090 each year.

“That was already quite a big chunk of money. But nowadays if you look at the cost of living increases, that’s not affordable for everybody anymore,” Ms Mihm told news.com.au.

More than half of Aussies have hospital or extras cover – with more than one million people signing up since the start of the pandemic.

With health insurance tightly regulated in Australia, insurers can only increase premiums once a year, under the health minister’s approval.

However, Choice found insurers were using tactics that allowed them to increase policies by closing existing policies and opening new ones with “essentially the same cover” at a higher price.

“Health insurers can close and open policies at any time, there’s no law against it,” said Ms Mihm.

“What is sneaky is that they have closed affordable policies, and then introduced new policies for new customers. So the old customers might still be on those old policies, but eventually, they might be moved over to a new policy that has increased dramatically in price.”

The report also noted some funds don’t clearly advertise cheaper Gold policies on their website and rather “spruik their newer, pricier policies instead”.

“The severe problem here is that these tactics aren’t transparent and aren’t giving you the information you would expect to make an informed choice about health insurance.”

However, the CEO of Private Healthcare Australia, the peak body that represents 21 funds, has disputed Choice’s claims that funds are using sneaky tactics, claiming premiums are increasing because the cost of healthcare is increasing.

“The claims by Choice are simply false,” Dr Rachel David told news.com.au. “Health funds are doing all they can to support their members facing cost of living pressure. They don’t want to increase premiums by a single dollar, but the health system is not immune from inflation.

“It is increasingly difficult to offer affordably priced Gold cover to members due to the high and growing costs this category must cover, including psychiatric services, weight loss surgery, fertility treatments, and pregnancy and birth.”

Premium hike rejected

In December, Health Minister Mark Butler rejected a request from 31 insurers that could have delivered an average increase of up to six per cent – the biggest premium hike in at least six years.

Mr Butler said during the cost of living crisis, the proposal didn’t pass the pub test. He insisted the funds go back to the drawing board and come up with a more reasonable figure.

“Based on the information currently provided by private health insurers, I am not inclined to approve their proposed premium increases,” he said.

“I’ve written to every private health insurer, directing them to have another go and put forward a more reasonable figure that considers their years of record profits and the declining proportion of premiums they return to customers, particularly while household budgets are under pressure.”

Dr David said the hike reflected inflationary pressures, record claims and covered the essential upgrades to thwart cyber attacks.

“The cost of medical and hospital services increased 5.9 per cent this year and there’s been a 9.6 per cent surge in hospital admissions funded by insurers,” she said.

“This is putting pressure on premiums.”

How Aussies can save money on health insurance

The government will announce this year’s health insurance increase in the next coming weeks before changes come into effect on April 1.

With the changes approaching, Ms Mihm encouraged Aussies to shop around for the best deal.

“There’s savings for a single person of more than $1,000 if you shop around and find the cheapest available Gold compared to the most expensive Gold,” she said.

“And if you are on a Bronze or Silver cover and you decide you want to have a baby in the next year and you want private health care, do not just ring your fund and get yourself upgraded, shop around first.”

She also recommended looking at smaller and restricted membership funds.

“It doesn’t matter if it’s a fund that you have never heard about, health insurance is all regulated,” she said.

“Smaller funds, and especially the restricted funds, which are available for a wide group of people like teachers, reservists, police and emergency workers, quite often have really good deals.”