Private health premiums are set to rise at the highest rate in eight years, climbing an average of 4.4% from April.
The above-inflation rise – the biggest since 2017 – was agreed upon after insurers were told to go back to the drawing board multiple times, according to Federal Health Minister Mark Butler.
Minister Butler and insurers say the increase reflects the rising costs of providing medical and hospital services, which rose 5% last financial year.
Private Healthcare Australia Chief Executive Dr Rachel David said health funds were working to balance affordability of health insurance with the cost of providing care to a population with increasingly complex needs.
“More people are using their health insurance for high-cost hospital care such as joint replacements and cancer treatment, and the cost of delivering care continues to rise. This premium increase reflects those realities,” Dr David said.
“If health funds could keep premiums the same without jeopardising their ability to pay claims, they would. The industry is acutely aware of how tough many Australians are doing it right now.”
“We’re seeing more no-gap and known-gap fee services to give people greater certainty about costs, along with new models of care that allow patients to safely receive treatment at home.”
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Health premium rises are approved by the federal health minister each year. Premiums rose by an average of 3.73% last year.
Doctors have recently raised the alarm on a lack of regulation governing contracts between private health insurers and medical practitioners.
AMA National President Dr Danielle McMullen said the Association was increasingly concerned about the impact this could have on patient choice and quality of care and the clinical autonomy of doctors in private practice.
Dr McMullen said there was nothing in the current Private Health Insurance Act or the Competition and Consumer Act to prevent the top five health insurers, which collectively control more than 80% of the Australian private health insurance market, from abusing their market power in contracting with individual medical practitioners.
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Mr Butler said he expects insurers and hospitals to work together to bring down costs and keep future increases to a minimum.
“The Government understands the pressure health insurance premium changes put on Australians and decisions about private health insurance premiums must put consumers first,” he said.
According to the Department of Health, Disability and Ageing in the 12 months to September 2025, insurers paid out increased benefits of more than $26.7 billion in health, medical and extras benefits.
This includes a breakdown of:
- Hospital treatment: up $1.2 billion to $20 billion
- General treatment: up $341 million to $6.7 billion
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