Medibank Private and NIB Holdings shares higher on premium increase news

The Medibank Private Ltd (ASX:MPL) share price and the NIB Holdings Limited (ASX:NHF) share price are both higher in morning trade after announcing their premium increases for 2019…

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In morning trade the Medibank Private Ltd (ASX: MPL) share price and the NIB Holdings Limited (ASX: NHF) share price have been on the move following the release of premium increase details for 2019.

The Medibank Private share price is currently 3% higher and the NIB share price has pushed 1.5% higher.

Here's a summary of what to expect in 2019 from these private health insurers:

Medibank Private's premiums.

Medibank and ahm health insurance premiums will increase by an average of 3.3% from April 1 2019, which will be the lowest average premium increase in 18 years.

In addition to this, the company notes that many of its customers will be able to lower their premiums due to Medibank's early adoption of the Federal Government's private health insurance reforms.

Medibank has adopted voluntary discounts for 18 to 29-year-olds on hospital policies from April 1, which effectively reduces its average premium increase to 3.09%.

NIB's premiums.

According to a release by nib this morning, it has received approval from the Federal Minister for Health to increase insurance cover premiums for nib health funds by an average of 3.38% across all products.

GU Health insurance premiums will increase by an average of 1.80%. As with Medibank, these changes will take place on April 1.

Should you buy these private health insurers?

I think this was a reasonably positive result for Medibank Private and NIB Holdings and wouldn't have been surprised to have seen lower increases implemented given affordability issues.

However, given the lack of wage growth in Australia, I don't expect things to improve greatly for either company next year and feel those outside the system are unlikely to be in a rush to join up any time soon.

In light of this, I intend to stay clear of these two companies and private hospital operator Ramsay Health Care Limited (ASX: RHC) until trading conditions improve.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended NIB Holdings Limited and Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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