Health insurance premiums will rise on average by 4% from April 1 due to increasing claims and costs, the private sector says.
And Federal Health Minister Mark Butler says insurers need to explain the new premiums to policy holders.
Private Healthcare Australia (PHA) Chief Executive Dr Rachel David claims health funds are working to balance affordability with rising costs for a population that is ageing.
The average premium increase for 2026 will be 4.41% compared to the rising cost of medical and hospital services (5% last financial year), the organisation says.
“More people are using insurance for high-cost hospital care such as joint replacements and cancer treatment.
“The cost of delivering care continues to rise. This premium increase reflects those realities,” she says.
“The industry is acutely aware of how tough many Australians are doing it right now.”
Butler says: “We’ve been working to get insurers to increase the benefits ratio to provide more support to hospitals and staff.
“The ratio increased to 85.9% in September 2025 up from 83% in 2022-23 and is due to increase to 87% for the 12 months from April 1.”
HEALTH SERVICE COSTS
Dr David says the industry is acting to lower out-of-pocket costs for private services.
“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,” she says.
These services include drug and alcohol rehabilitation, chemotherapy and post-surgical care.
“These innovations are helping patients save money, reduce travel and recover in greater comfort. This is the future of accessible, affordable care,” Dr David claims.
She says health funds are expanding management and prevention programs for patients to better manage chronic disease and cut back on the need for more expensive care.
The premium change will also give extra support to private hospitals, many of them under financial pressure due to higher operating costs and lower occupancy.
“Private hospitals are a critical part of Australia’s care system; this adjustment will help ensure they remain viable and available when patients need them,” Dr David says.
More than 15 million Australians have private insurance, including around 14 million with hospital cover which allows them to choose their hospital, doctor and appointments.
“For every dollar spent on private insurance, consumers receive an average of 85 cents back in care benefits,” she says.
“When reviewing cover, people should consider their current needs, those of their family and speak with their GP about any care they may need in the near future.”
Australians looking at, or reviewing, their private insurance can visit PrivateHealth.gov.au for independent information: click here to go to their website.
ABOUT PHA
Private Healthcare Australia is the peak representative body for this country’s private health insurance industry.
It represents more than 20 funds and 15 million people (55% of the population) who have private insurance.
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