Every festive season has its Grinch and this year, it was federal Health Minister Peter Dutton, who approved a hefty rise in health fund premiums two days before Christmas. The 6.2 per cent average increase, equating to about $21 a month, was the largest rise in almost a decade and was met with widespread anger from policyholders and consumer advocates.
But the unexpected rise has led to longer-term concerns about the financial logic of having private health insurance, with some premiums rising to $3500 a year, soaring out of pocket costs and the value of the rebate diluted for higher income earners.
The Consumers Health Forum of Australia believes the cost of private cover is increasingly unaffordable for ordinary Australians while the industry peak body, Private Healthcare Australia, is predicting even more people will downgrade their level of cover or ditch their policies entirely, even though it means being penalised through paying an extra loading on hospital costs if they are over 30.
The unexpected rise of premiums has led to longer-term concerns about the financial logic of having private health insurance.
Analysis by PHA has shown that, for the moment, most people are opting to keep their policies but trimming them back to a basic level to lower the cost of the premium.
Almost 1 million policies, totalling 17 per cent of the sector, based on PHA research, have been downgraded since the previous government introduced a means test on the private health insurance rebate at the beginning of last year. PHA chief executive Michael Armitage anticipates more will follow as consumers see their premiums rise from April.
At the same time, those taking out new policies are going for the cheaper options. Policies with an excess or exclusions have grown by 3.5 per cent over the past two years compared with unrestricted policies, which have increased by only 0.5 per cent.
Armitage believes the trend towards either downgrading or taking out basic policies will force more people into an overstretched public system. ''When people downgrade their level of cover, they end up straight back in the public hospitals,'' he says.
A spike in out-of-pocket costs, which have almost doubled over the past decade, has also diverted more people with private health insurance into the public system, according to Consumers Health Forum of Australia spokesman Mark Metherell.
''There has been an increase in the number of people with private health insurance choosing to have operations in the public hospitals to avoid paying the gap fees, which can run into the thousands of dollars,'' Metherell says.
''The rebate was intended to encourage more people to take up private health insurance to keep them off the public hospital waiting lists but, increasingly, that's not the case. The rebate was meant to make it more affordable for ordinary folk but how many people can afford to pay $3500 a year?''
It is a question that concerns Australian Healthcare and Hospitals Association chief executive Alison Verhoeven, who agrees that private healthcare has been put increasingly beyond the reach of average income earners and is not delivering what was intended when the 30 per cent rebate was introduced in 1999.
''In this country, we have a system which relies on the good take-up of private health insurance and private health facilities to allow the public system to work in an effective way to support those who can't afford to take out private cover,'' she says.
''From our perspective - and our focus is ensuring all Australians have access to quality, affordable healthcare - we are concerned that public hospitals don't become overcrowded because people are being diverted into that system.
''It's not good news and I think the unfortunate thing is it's being presented as if it is good news. I found it quite interesting that the Health Minister presented it as representing stability for Australians when really it was representing stability for health insurers.''
She believes the ''tinkering around the edges'' demonstrated in last week's announcement will not go towards creating financially sustainable healthcare and the entire system is in need of an overhaul.
''We have to be realistic about this,'' she says. ''Pushing up the premiums does provide certainty to the large health insurers but it doesn't help consumers if the only thing they are guaranteed is year after year of endless rises in their premiums. No one will be able to afford it. It's not encouraging an effective system.''
About 12.8 million Australians, or almost 55 per cent of the population, have private health insurance.
Fifteen years ago, before the introduction of the 30 per cent private health insurance rebate and the Medicare levy surcharge for people with inadequate or no cover, only 38 per cent of people were privately insured.
However, those who have taken out private healthcare are paying dearly for their choice, with the average premium rising by 130 per cent since 1998, compared with overall prices, which have gone up by about 50 per cent.
Taxpayers are also footing a growing bill, with $5.4 billion going towards the rebate this financial year, rising to $5.91 billion in 2016-17.
Metherell believes savvy consumers will bring out their calculators over the coming months to work out whether it is worth their while to continue paying for private cover.
''We are reaching a crunch point,'' he says. ''The benefit of the rebate has been diluted because of the rising cost of premiums and the rising cost of healthcare. It's becoming a zero-sum game.''
However, Private Healthcare Australia's Armitage points out that people take up private health cover for many reasons, not just because of the rebate or to avoid paying the Medicare levy surcharge, which goes up to 1.5 per cent for families earning more than $272,001 or singles earning more than $136,001.
''For most people, the surcharge is not the main reason they take out insurance,'' he says. ''It's ease of access, no waiting lists and choice of doctor.''
According to the National Health Survey, 43 per cent of people with private health insurance took it up for security or peace of mind, while a further 23 per cent cited concerns over public hospital waiting lists. Of those who did not have private health cover, 64 per cent said it was because they could not afford it.
Armitage rejects suggestions that the current split between those with private health cover and those without is leading to a situation of haves and have-nots, pointing out that almost half of all policyholders have household incomes of less than $50,000 a year.
''Every time premiums go up, I get calls from the classic little old ladies from all over Australia who say, 'Private health insurance is the last discretionary expenditure I can afford and I will not give it up','' he says. ''We know we are portrayed as the preserve of the wealthy but it is not true.
''You hear this argument that people with private health insurance earn a lot of money so it won't matter - they'll just pay it. Well, frankly, they haven't just paid it. They have downgraded their cover.''
Matt Levey, head of campaigns at consumer advocacy group Choice, analysed the value of private health cover last year, finding that the majority of policyholders would benefit, depending on their health needs.
''We found that at almost every income point, it was worth your while,'' he says.
However, he says their research found that the value of policies has been eroded, particularly around so-called ''extras'', which can include anything from dental to natural therapies depending on the policy.
''I think where a lot of people have had their value diluted is around extras,'' he says.
''From the work we have done, we've seen consumers end up with a whole bunch of bundled services, some of which they will never use and others which have a yearly or a lifetime limit on them. That's an area of huge consumer confusion and increasingly dubious value.''
Lilith Bohler, a researcher with cost comparison company Canstar, agrees private health insurance was ''almost as complex as mobile phone plans'', making it almost impossible for consumers to figure out what they need without the help of an actuary and a crystal ball.
''The problem with private health insurance is there are a lot of different elements to consider,'' she says. ''To answer the question of when it becomes financially unviable, you have to consider your age, your lifestyle, your income, whether you're single, married or have children. It's not straightforward.''
The way Armitage sees it, every year those with private health cover don't make a claim should be considered a good year.
''When I get my car insurance bill each year I think, 'Oh, isn't it great. I've got through another year without my car being stolen and taken to the nearest national park and torched,''' he says.
''Yet when the health insurance bill comes around, people say, 'Those bastards, they've got their hands in my pockets'.
''They should really be saying, 'Fantastic. I don't have cancer, I haven't needed to have an operation'. But people just don't think of health insurance in that way.''