Private health premiums to rise as hospitals cry poor

It is an increase on previous years but less than the six per cent jump some insurers had hoped for.

Already some have announced their increases will be higher, with insurer nib announcing an average rise of 5.79 per cent.

The insurer's chief executive Ed Close said premiums were driven up by hospital costs including wages and supplies increasing, as well as the renewal of contracts with private hospitals. 

"Those contracts ensure access to services and limit out of pocket costs, which is important when members' budgets are already stretched," he said.

Meanwhile, HBF announced a 2.8 per cent average premium increase.

"As a not-for-profit health insurer, we are focused on keeping premium increases as low as possible for our members, especially with cost-of-living pressures affecting household budgets," chief executive Lachlan Henderson said.

Private Healthcare Australia chief executive Rachel David said insurers needed to raise premiums to keep up with inflation.

"The increase of 3.73 per cent, agreed with federal regulators, is as low as the health funds can go without seriously squeezing private hospitals and other providers," she said.

The changes take effect in April.

Australian Private Hospitals Association chief executive Brett Heffernan said the premium increase - based on an average annual cost of $4000 - would deliver a $2.2 billion windfall to insurers, almost $150 per policy.

"But the providers of healthcare treatments and services, private hospitals, don't expect to see much of it in payments for treatments and care," he said.

Opposition health spokeswoman Anne Ruston said the incoming increase was the highest in seven years and policyholders had been left with little time to shop around before their premiums go up.

Mr Butler said he had written to 29 insurers in December asking them to resubmit claims for an increase.

"Based on the resubmissions, I was not prepared to tick and flick their asks and instead asked them to resubmit again," he said.

The multiple submissions and resubmissions had however ensured a better deal for 15 million people with private health insurance, he added.

Insurance comparison site iSelect said increasing premiums could prompt many to drop or change their cover, with 28 per cent of a November survey's 1545 respondents saying any increase would prompt them shop around.