Private health insurers cleared for above-inflation rate increases

More than 15 million Australians are facing added cost-of-living pressures after the Federal Government approved an above-inflation increase to private health insurance premiums.

The average 4.41 per cent increase announced by Federal Health Minister Mark Butler on Tuesday is the biggest since the 4.84 per cent rise levied in 2017 and follows last year’s 3.73 per cent increase.

It is the second major hit to households in the past two weeks after the Reserve Bank of Australia lifted official interest rates by 25 basis points, pushing mortgages higher.

Mr Butler, who has to approve premium rates, said the 2026 increase reflected the rising costs of providing medical and hospital services, which rose 5 per cent last financial year.

“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.

“This year’s decision reinforces that premium increases must be backed by clear evidence and contribute to system-wide improvements, not just insurer balance sheets.

“I expect private health insurers and hospitals to work hard to bring down costs and keep future price increases to a minimum.”

More than 15 million people, or half of the Australian population, have some form of private health insurance, with 45 per cent holding private hospital cover.

HBF, WA’s dominant private health insurer, has again positioned itself to lure customers from more expensive rivals by minimising its increase, revealing it had limited the rise for its 1.2 million members to just 2.15 per cent, down from last year’s 2.8 per cent increase.

The 85-year-old mutual said its increase was the lowest among Australia’s five biggest health funds for the second year running.

By comparison, premiums at Medibank, Australia’s biggest insurer, are being hiked 5.1 per cent, which equates to an extra $4.46 a week for a family policy.

The private health insurance sector’s peak industry body, Private Healthcare Australia, said health funds were “acutely aware of how tough many Australians are doing it right now”.

However, they had to balance the affordability of health insurance with the rising cost of caring for an ageing population with increasingly complex chronic disease 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,” PHA chief executive Rachel David said.

“This premium increase reflects those realities.”

The Australian Medical Association has already expressed concern about the growth of premiums.

A report card published last year found many people were paying more for premiums but were covered for fewer services.

Premiums doubled between 2008 and 2024 while the Medicare Benefits Schedule indexation increased by less than 20 per cent.

Mr Butler, who dropped Tuesday’s rate announcement at the same time as Angus Taylor unveiled his new frontbench, is expected to be in Perth on Wednesday for a health-related announcement.

It comes after the Government launched its $8.5 billion plan to overhaul bulk-billing on November 1, with the aim to lift official bulk billing rate for GP visits.

Under the plan Labor took to the election, GPs will receive an incentive payment for every single patient they bulk bill.

Previously, the incentives only applied to children, pensioners, or people with concession cards.

All patients at the signed-up clinic must be bulk billed for it to receive a further incentive payment worth 12.5 per of the Medicare benefits schedule amount for the service.