Insurers hiding soaring increases to top-level health cover

Some Australians are paying more than three times the headline premium increase for top-grade hospital insurance.

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Uta Mihm @umihm

Mark Blades

Last updated: 14 February 2024

Need to know

We found the price of top-level Gold hospital cover has increased by about 31.5% in the past three years
These price increases are much higher than the 8.6% average increase across all levels of cover (Bronze, Silver and Gold) reported by the Department of Health and Aged Care
A sneaky tactic employed by health insurers is quietly closing cheaper Gold policies and releasing much more expensive policies for new customers

The Australian government is set to announce this year's health insurance increase, which means that come 1 April, you'll be paying more each month for the same cover.

Many Australians, particularly those who need top-level Gold hospital insurance, are already facing sky-high premiums that make health insurance increasingly unaffordable at a time when many of us are already struggling with the cost of living.

And now CHOICE analysis of three years of hospital insurance pricing data shows that health insurers – including the five biggest health funds – are jacking up the price of premium cover at a much higher rate than the advertised averages.

CHOICE health insurance expert Jodi Bird says: "Average health insurance premiums across all levels of cover went up by 8.6% over the past three years, according to the Department of Health and Aged Care.

"But when we looked at the prices actually available to an average customer shopping for insurance, we found that the price of top-level Gold hospital policies has increased by over 30% on average.

"Top-level Gold cover is designed for many Australians who have specific high-level needs, such as management for mental health conditions or care in a palliative or rehabilitation facility.

"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. Often these are the people who can least afford higher premiums," says Bird.

Top-level cover becoming even less affordable

In 2021, a family in NSW paid on average $5380 for a Gold hospital policy (with a $750 excess) per year. Now, the average price has blown out to $7090 per year.

A single person in 2021 paid around $224 per month, or $2690 a year, for Gold hospital cover (with a $750 excess). Today they'd get slugged with premiums closer to $295 per month or $3540 per year on average for the same level of cover.

The big five health funds – Medibank, Bupa, HCF, HBF and NIB – have implemented substantial price rises.

Our analysis, which compared policies available to new customers three years ago with those available now, found the cost of their Gold hospital policies has skyrocketed with increases even higher than the Australian average of 31.5%.

Looking at policies in NSW with a $750 excess, Medibank's 2024 Gold hospital policy cost 43% more than the policy they offered in 2021. NIB's Qantas Gold policy is 36% more expensive, and Bupa and HCF's offerings are about 35% higher than those available in 2021.

In WA, HBF's current Gold policy is 47% more expensive than the Gold policy it was selling three years ago.

Sneaky sky-high increases to top hospital cover

Government figures say average health insurance premiums have increased by 8.6% over the past three years, but CHOICE research has found the cost of top-cover Gold hospital policies has skyrocketed far beyond that.

Medibank – 43% (New South Wales)
NIB (Qantas) – 36.4% (New South Wales)
Bupa – 35.4% (New South Wales)
HCF – 34.4% (New South Wales)
HBF – 46.9% (Western Australia)

We compared Gold policies available to new customers in February 2021 with those available in 2024 in New South Wales, except for HBF where we looked at Western Australia, as this is their largest customer base.

Sneaky tactic 1: Close cheaper policies; replace with more expensive ones

Health insurance is highly regulated. Health insurers can only increase premiums once a year and they must seek approval from the Minister for Health and Aged Care to do so.

But at any time health insurers can close policies to new members. Insurers can also release new policies at any time. And we've found many instances of funds closing existing policies to new members while at the same time opening new policies that offer essentially the same cover but with a slightly different name and a much higher price tag

"Our analysis shows several insurers are using these sneaky tactics to jack up the prices," says Bird.

Even when some funds keep cheaper Gold policies open to new customers, they don't advertise them – they spruik their newer, pricier policies instead

For instance, in June 2022 HBF closed their Gold Hospital policy in WA, which cost $215 per month with a $750 excess. They then released their Gold Hospital Elevate policy to new members at $280 per month, which is essentially the same cover with a 30% increase in price.

And in October 2023, the top hospital policy Medibank offered with a $750 excess was Gold Complete Hospital, which cost NSW customers $255 a month. In November, Medibank closed this policy and released Gold Protect. This is essentially the same cover, but costs $300 per month at the same excess level – which is an extra $525 per year, or 17% more.

Other price jumps we found include these NSW policies with $750 excess:

In August 2023 NIB closed their Qantas Gold Hospital policy, which cost $280, and released Qantas Gold Top Hospital for $325 (17% jump).
In April 2023 Bupa closed their Gold Complete Hospital policy, which cost $265, and released Gold Comprehensive Hospital for $305 (15% jump).
In March 2022 HCF closed their Hospital Gold policy, which cost $235, and released Hospital Premium Gold for $285 (more than 21% jump).

For our analysis, we looked at individual policy examples in NSW for Bupa, Medibank, HCF and NIB, and we looked at WA for HBF. Read more under 'How we calculated the increases'.

Sneaky tactic 2: Show new customers the expensive policies only

We've also discovered that even when some funds keep cheaper Gold policies open to new customers, they don't advertise them – they spruik their newer, pricier policies instead.

Medibank currently has two Gold policies available to new customers – at the $500 excess level there's Gold Advanced, which costs $265 per month in NSW, and Gold Protect, which is $325 per month.

But only the Gold Protect policy is shown on the Medibank website, which means many people don't know the cheaper option exists.

If you call the insurer and specifically ask for it, you should still be able to buy the cheaper policy. You can search all currently available health insurance policies using our independent health insurance finder.

How to avoid paying too much for health insurance

Many Australians took out private health cover during the COVID-19 pandemic, but with the sky-high increases of Gold hospital insurance over the past few years and another premium increase on the way, health insurance has become even less affordable for people who really need it.

If you opted for top-level Gold hospital insurance 'just in case', now is the time to seriously think about dropping it or downgrading to more affordable cover.

And if you're thinking of upgrading to a Gold policy – for example, if you're planning to have a baby and want to deliver in a private hospital or you anticipate you'll need premium cover in the next few years – don't just automatically upgrade with your current fund. We often see that the best deals available are with smaller funds and restricted membership funds.

To help you make sense of your options, our health insurance comparison tool lets you compare policies from over 40 insurers. We're a nonprofit organisation and we don't take any commissions, so you can be sure we'll help you find the best policy for you (not what's best for the insurer).

Health insurers justify their price rises as they say they are in line with the increasing cost of health care, particularly on the services covered by Gold policies, as well as the risk profile and claims statistics associated with top-cover Gold policies.

Nonprofit insurer HBF told us: "In looking specifically at our Gold policies, the claims HBF pays to members continue to be higher than the premiums we receive."

Insurers also said that by opening new policies they were able to limit the premium increases for people on closed policies.

While we understand that insurers, especially nonprofit funds, set prices based on their costs, we think transparency is very important, especially in an area such as health care where potentially sick and vulnerable people need to be able to rely on their health insurance.

When there is such a considerable difference between the highly publicised average premium increases and the reality of the higher prices affecting a range of Australians, it hinders our ability to make informed choices about health insurance.

Do you need Gold health insurance?

Gold hospital insurance policies are designed for people who want to be covered for specific health needs. For example:

young families who are planning to have a baby and want to deliver in a private hospital
people who need hip or knee replacements or cataract eye surgery
people who need end-of-life palliative care
families with a child who has a serious eating disorder needing in-hospital care
young people with mental illness and mothers with serious postnatal depression who need in-hospital psychiatric care
people who need rehabilitation after an accident or stroke
people who need weight-loss surgery
people with chronic pain; for example, because of coronary heart disease.

To analyse the average increase in cost of Gold hospital cover over the past three years, we compared premiums for Gold policies available to new customers with a $750 excess on 1 February 2021 with those available on 1 February 2024. Restricted membership funds and corporate policies were not included in the analysis.

Using this method, we found the national average price increase of Gold hospital policies over the past three years was 31.5%. There may be small differences in cover between the policies we compared in 2021 and 2024.

For example, the current Bupa Gold policy includes a family in-hospital benefit of $60 per night for accommodation and $30 per day for meals (provided by the hospital) if a family member is required to stay at the hospital with the patient.

And Medibank's newest policy, Gold Protect, pays up to $500 per membership towards an admission fee at the emergency department of a private hospital and you may also not be charged an excess if you have a no-gap procedure.

But its closed Gold policy, Gold Complete Hospital, paid up to $200 per family ($100 single) per year for costs associated with a stay in a hospital such as high-cost pharmaceuticals, gaps or prostheses or aids and appliances provided on discharge. So there are pros and cons to each.

However, for each fund there was only one Gold policy with a $750 excess open to new members at the time, regardless of which benefits you'd prefer.

All prices given in the article are monthly premiums for single policies with a $750 excess for people living in NSW, with the exception of HBF policies, where we used premiums for WA, HBF's largest customer base. Premiums are rounded to the nearest $5, and do not include the health insurance rebate, any discounts (such as for prepay or direct debit) or Lifetime Health Cover surcharges.

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