How to beat health insurance hikes + Cyclone Trump hits the sharemarket

Hi everyone,

Happy Friday. Lots to cover this week so let’s get straight into it.

In this week’s newsletter:

• How to avoid the rise in private health insurance premiums before 1 April.

• Trump’s sharemarket impact compared with other US presidents.

• Aussie dividend payouts hit a four-year low.

• Property resales making big profits.

• How the tariff wars are impacting housing.

• SMSFs move to cash.

• Doctors and specialists forced to publicise their fees.

• OECD says Trump’s tariff war will backfire on the US.

10 days to go before health insurance premiums rise. Here’s what to do

Around 15 million Aussies with some form of private health care cover are about to feel the pinch of another rate rise on 1 April.

The government has approved an industry average price increase of 3.73 per cent - the biggest hike since 2018. But don’t be fooled by the headline figure because the impact varies massively between funds and individual policies.

Some of the nation’s popular funds (like Bupa, HCF, Medibank and NIB) are increasing premiums between 5-6 per cent which is above the industry average. Police Health Limited has the highest average increase - a whopping 9.56 per cent. In real terms, say your policy is $3,500 a year, do you really want to cop a possible $350 annual increase? I’d rather save it for a grocery shop or two.

But other plans are lifting premiums by just 1 per cent. That’s why the 3.73 per cent is a bit misleading.

Private health insurance premiums are one of our biggest household bills so it is essential you shop around and compare the market for the best deal, rather than just simply copping the premium increase. It could save you hundreds, maybe thousands, of dollars.

But let me first dispel a couple of common myths I come across which seem to be stopping people from changing policies:

• “If I switch to another insurer I’ll be locked out of some treatments because waiting periods will be reset.” - Not true. If you change to an equivalent (or lesser) plan, the new waiting periods are not reset by a new provider. But if you switch to an upgraded plan, then waiting periods could apply unless the new provider waives them as an incentive to change.

• “I have a medical condition which will increase my premium with a new provider because I am a higher risk.” - Not true. Private health insurance premiums are ‘community rated’ and not ‘risk rated’. I can understand why people are confused because if you’re a bad driver and have a lot of accidents, your car insurance premium will be higher to reflect the fact that you're at a higher risk of having a bingle and making a claim. But with health insurance, even if you have a medical condition, you are rated the same as any other healthy Australian of your age and pay the same premium.

So there aren’t any barriers to you comparing the market and seeing if there’s a better deal for you. The first step is to put your policy under the microscope, do a pulse-check on features, and take a scalpel to some of the ‘extras’ you may not be using.

Here are my health insurance saving hacks, which aren’t as scary as you’d think.

Lock in last year’s prices

Some health funds will let you pay for your policy up to a year in advance. By paying 12 months upfront (before prices go up on 1 April), you can effectively turn back time on this year’s rate rise.

While not everyone is in the financial position to pay a year’s worth of premiums in one hit, this hack is a doozy if you can do it. Depending on your fund and your policy, this move could help you avoid hundreds of dollars in extra premiums.

Switch, don't ditch!

If you’ve been with the same health fund for several years, you could be missing out on discounts and incentives reserved for new customers. Run a quick comparison and see if you can find a similar value for less.

Bump up your excess

Agreeing to a higher excess can be a great way to save on your regular premium, as long as you don’t mind paying more in the event you need to claim.

If you don’t have many hospital visits or treatments planned, and you have a bit of money stashed in your emergency fund, this could be a good option.

Work your perks and incentives

We’ve already started seeing health insurers offer an array of great perks and incentives to lure in new customers, including weeks of free membership, waived waiting periods, access to frequent flyer points, rewards programs and more. If you can find cheaper cover, these offers are a great way to sweeten the deal.

Consider flying solo

Just because you’re in a relationship doesn’t mean you need to do everything together ... and that includes your health policy!

Depending on your personal circumstances, the level of cover each partner takes out, whether you’re buying a hospital, combined or extras policy, and the insurer you choose, it may work out cheaper to take out two individual policies.

Switch to a lower level of cover

All that glitters is not gold! Unless you need cover for pregnancy, sleep studies or weight loss surgery, you might be better off on a lower level of cover. Even a Silver Plus policy, which is very comprehensive, will cost a lot less than top-tier Gold cover.

Speak to an expert and see if a lower level of cover might better suit your needs and budget.

Use or lose extras

Remember to turn your extras on and off as you need them. If you only need new glasses every five years there’s probably no need to pay for the privilege in between, until you want to reset the waiting period.

Some extras policies can include benefits like massage, acupuncture and even hypnotherapy. If you’re using them, great. If you’re not, time to lose them!

Trump’s impact on the sharemarket

In last week’s newsletter I shared a chart which compared the reaction of the US sharemarket in the first 100 days of Donald Trump’s first term in office compared with this term. The difference is stark, with the first term showing a strong bull market while this term, US stocks have fallen off a cliff.

The S&P 500 and NASDAQ surged 6 per cent to 9 per cent from Election Day to 19 February. However, they then began to drop and last week the S&P 500 fell into correction territory, dropping 10 per cent through to 13 March, while the NASDAQ fell more than 11 per cent.

This week the markets appeared to steady, but with the threat of more tariffs looming on 2 April there are questions over how long that will hold.

It’s interesting to compare the stockmarket performance over the first 100 days of Obama and Biden’s first terms as well:

Aussie dividend payouts hit four-year low

If you depend on dividends from your share investments for income to support your lifestyle, beware. Aussie companies are expected to pay out and distribute the fewest dividends in four years in the coming months as sluggish demand from Australia’s largest trading partner, China, weighs on commodity prices, forcing ASX-listed miners to cut dividends.

According to CommSec estimates, major Aussie companies classified in the S&P/ASX 200 index will pay out around $32.1 billion in dividends in the first five months of 2025, down 5.6 per cent from last year’s $34 billion.

The crisis engulfing China’s property and construction sectors weighed on mining profits during Australia’s recent company reporting season, forcing commodity heavyweights such as BHP, Rio Tinto and Fortescue to slash their dividends amid falling profits, declining capital returns and rising capital expenditure.

BHP will pay shareholders about A$4 billion after declaring an interim dividend of just US50 cents per share in the latest reporting season - the lowest in eight years. The half-year dividend was 30 per cent lower than the same time last year and the lowest since February 2017.

Rio Tinto also declared its lowest dividend payment in seven years, while Fortescue slashed its dividend 54 per cent to 50 cents per share. The only bright spot among the resource stocks was diversified miner, South32, whose profit rose 577 per cent, allowing it to increase its dividend 750 per cent to US3.4 cents a share.

Among the oil and gas producers, Woodside Energy dropped its dividend from US60 cents a share to US53 cents, while Santos slashed its dividend by 41 per cent.

If you’ve been struggling with huge increases in insurance premiums, you’ll be pleased to know (if you’re a shareholder rather than a customer) that it was a cracking reporting season for insurance company shareholders. Suncorp lifted its dividend 58 per cent, QBE Insurance 32.6 per cent, and Insurance Australia Group 18.2 per cent.

Among other blue chip stocks, Commonwealth Bank (CBA) declared an interim dividend of $2.25 per share, up from $2.15 a year earlier.

Qantas Airways showered investors with its first post-pandemic ordinary dividend, and a special dividend, for the first time in a quarter of a century. It declared an interim dividend of 16.5 cents per share (the first payout since it paid 13 cents in September 2019), plus a special dividend of 9.9 cents.

Telstra declared a 9.5 cents per share interim dividend, up from 9 cents the prior year.

According to CommSec, while ASX-listed companies continue to generate strong income for investors, the economic backdrop remains challenging for Aussie firms operating in a higher inflation and interest rate environment. Trade and political uncertainty alongside slowing Chinese demand for commodities are weighing on company earnings.

Good news for property owners

Residential property sales are making record profits according to Core Logic’s latest Pain & Gain Report.

In the December quarter 94.8 per cent of sellers made a nominal profit, with a median profit of $306,000. This was a series high for the median nominal gain measure, with Australians continuing to see record gains from home sales.

Brisbane claimed the top spot for profit-making resales in Australia, with almost all resales making a nominal gain (99.6 per cent). Melbourne was one of only two capital cities (alongside Darwin) that had a profit-making sales rate of less than 90 per cent in the December quarter.

Houses were far less likely to see a loss, with only 3 per cent selling for less than the previous price. Units had a loss-making sales rate of 10.1 per cent in the quarter, up from 9.3 per cent in the previous quarter. Sydney and Melbourne units accounted for almost half the loss-making sales.

Loss-making resales were, on average, held for a shorter amount of time than profit-making sales, with a median hold period of 9.2 years across all resales - including 9.3 years for profit-making resales, and 7.6 years for those that made a loss.

Melbourne inner-city units had the highest number of loss-making resales, as the off-the-plan apartment boom has clearly meant lasting losses for sellers in Sydney and Melbourne.

Adelaide was the second most profitable market of the greater capitals and regions across Australia, with 99.1 per cent of resales making a nominal gain, while Perth was third at 97.4 per cent.

Sydney had the third lowest rate of profit-making sales but still saw over 90 per cent of resales make a nominal profit

3 key scenarios which could affect the future of the property market

While the overwhelming majority of property resales are earning nice profits for their owners, there is a lot of uncertainty on global financial markets. The most immediate reaction to this uncertainty is always reflected in sharemarkets, but down the track there is also an impact on property.

Ray White chief economist, Nerida Conisbee, has examined three scenarios and the consequences for the property market:

Scenario 1: Global economic slowdown and lower interest rates

In this scenario, global economic weakness actually benefits the housing market through monetary policy responses.

If the US enters recession and global economic slowdown intensifies, central banks would likely respond with further interest rate cuts. For Australia, this could mean the three additional rate cuts markets are currently pricing in for this year become reality.

Lower interest rates would increase borrowing capacity, allowing buyers to service larger loans. This increased purchasing power would fuel continued house price growth as more buyers compete for limited housing stock.

However, it's important to note that while lower repayments might make mortgages seem more manageable, fundamental affordability would likely worsen as property prices rise faster than incomes. First-time buyers might find it easier to enter the market due to lower repayments, but they'd be purchasing at higher overall prices.

This scenario would also likely see investors increasing their market activity as they seek safe haven from volatile equity markets, adding further competition in the property market.

Scenario 2: Higher tariffs and rebounding interest rates

This scenario envisions escalating trade tensions leading to inflationary pressures that force a reversal of current monetary policy expectations.

If global trade wars intensify with higher tariffs, we would see imported inflation rise significantly across major economies. Central banks, including the Reserve Bank of Australia, would need to increase interest rates to combat these rising prices, despite current expectations of further cuts.

Under these conditions, Australian house price growth would likely soften as borrowing capacity decreases. Potential buyers would become more cautious amid broader economic uncertainty, and the market would gradually shift to favour buyers, with properties spending longer periods on the market before selling.

While structural undersupply would continue to provide a floor for prices, the pace of growth would be noticeably moderate compared to current trajectories.

Scenario 3: Stagflation with China economic slowdown

This represents the most challenging outlook for Australia's housing market, combining domestic economic difficulties with problems in our largest trading partner.

In this scenario, the Australian economy experiences the difficult combination of high inflation alongside weak economic growth - classic stagflation. Compounding these challenges, a significant slowdown in the Chinese economy reduces demand for Australian resources.

Resource-rich states like Western Australia and Queensland would be particularly affected, potentially seeing population outflows as employment opportunities diminish. This would create substantial headwinds for property markets in these regions.

With higher costs of living and stagnant wages, households would find it increasingly difficult to save for deposits or qualify for home loans. The property market would likely become severely bifurcated, with premium locations in major cities potentially maintaining their value while outer suburbs and resource-dependent regions experience price declines.

Rental markets would also face pressure as investors reassess returns against rising holding costs.

Navigating uncertain waters 

For potential homebuyers navigating these uncertain scenarios, considering your long-term housing needs and financial situation remains crucial. While global economic forces will influence Australia's housing market in the short term, the structural resilience of our property market provides some stability even during periods of volatility.

The remarkably swift recovery we witnessed in January 2025, after just one month of price declines, demonstrates how quickly market sentiment can shift based on changing economic expectations. This adaptability will likely continue to characterise Australia's housing market as it responds to whichever economic scenario unfolds in the coming year.

SMSFs increase their cash investments

There is an old saying that during times of uncertainty, investors feel the safety of cash. That certainly looks to be happening within Australia’s self-managed superannuation funds.

New data from the Australian Tax Office (ATO) shows SMSFs’ assets under management stood at $1.02 trillion in the December quarter - of that, $161.4 billion was held in cash - up almost $1 billion from the previous quarter and accounting for around 16 per cent of their total assets.

This is despite the Reserve Bank showing that three-year term bank deposit interest rates fell to just 3.25 per cent, which is well below 4 per cent a year ago. Online savings accounts returned just 1.7 per cent, down from 1.85 per cent. Remember, inflation is at 2.5 per cent.

Despite sharemarket volatility, SMSFs invested a significant portfolio of their assets in Australian shares - $277.6 billion representing 27.2 per cent of all SMSF assets - but down from $281.7 billion in the September quarter. SMSFs invested a record $168 billion in direct property, accounting for 16.5 per cent of their total assets.

But fixed-income investments accounted for just $11.7 billion of SMSF assets, with another $7.1 billion invested in loans, accounting for just 1.8 per cent of total assets.

About time: Medical doctors will have to publicly disclose fees

The cost of going to the doctor and paying for specialists can be a shock for many as the ‘gap’ out-of-pocket expense seems to be constantly growing.

I interviewed the boss of the private health insurance association, Rachel David, and one of her big tips was when your GP is recommending a specialist, explain you want a referral to one who doesn’t charge more than your health fund will cover. She said our medical specialists are of such high quality there won’t be any major difference in the standard of care.

But doctors aren’t very transparent in their fees. So good on federal Health Minister, Mark Butler, for this week announcing the Government will compel doctors (including surgeons and anaesthetists) to disclose their fees so consumers and their GPs have more transparency about how much specialists charge before they attend appointments.

Since the former Government launched the Medical Costs Finder in 2019, which has cost more than $24 million, fewer than 100 doctors have voluntarily published their fees on the website.

While most doctors charge appropriately, an increasing number of Australians have been charged exorbitant fees by specialist doctors, including more than $950 for first appointments with psychiatrists.

According to Rachel David, some anaesthetists have also allegedly waited until the day of procedures to disclose their fees, leaving patients powerless to contest how much they were being charged out of fear of procedures being cancelled.

Last week, a survey of more than 5,000 people by Patients Australia and La Trobe University revealed one in five Australians were not attending appointments with specialist doctors such as paediatricians, cardiologists and surgeons due to concerns about the cost. Data released last year by the Australian Bureau of Statistics also showed an increasing number of people were putting off seeing specialist doctors due to cost.

Mark Butler has said the upgraded Medical Costs Finder website would include information showing the financial arrangements private health insurers have with specialist doctors, and how often patients paid out-of-pocket fees for services not fully covered under their insurance policy.

No one wins a trade war

This week, the OECD published its latest global economic outlook, with forecasts downgraded as a result of the pending trade war and tariff increases.

It downgraded global growth for this year from 3.3 per cent to 3.1 per cent, and for 2026 from 3.3 per cent to 3 per cent.

In terms of inflation, the OECD says a 10 per cent lift in tariffs would add 0.4 per cent to global inflation and 0.7 per cent to US inflation.

As this chart shows, the US could be the biggest casualty of a trade war.