Analysis by Money.com.au reveals that private health insurance benefits in Australia have fallen to their lowest level since the Australian Prudential Regulation Authority (APRA) began publishing annual industry reports in 2008.
Private health insurance typically helps cover a portion of medical expenses for private patients—such as hospital stays, general medical care, and specialist treatments—after Medicare has made its contribution.
However, APRA’s latest data shows that private health funds now cover just 66.7% of the remaining hospital and general medical costs, down significantly from 75.7% five years ago and 70.7% in 2008.
In 2024, medical costs totalled AUD7.7bn. After Medicare contributions, AUD4.1bn remained for patients and insurers. However, private health funds covered only AUD2.75bn, leaving Australians to pay AUD1.37bn out of pocket — up from AUD779m five years ago and AUD523m in 2008.
Money.com.au’s general manager of health insurance Chris Whitelaw said Australia is facing a private health insurance crisis.
“The gap between what insurers should be covering and what they cover is growing. Five years ago, private health funds picked up three-quarters of the bill after Medicare — now, it’s closer to two-thirds,” he said.
“Many Australians take out private health insurance expecting it to protect them from big medical bills, but the reality is they’re still left holding the bag. Medical costs are rising, health insurance coverage is shrinking, and patients are paying the price — all while premiums keep going up each year,” he added.
In 2024, medical expenses in Australia surged by 9%, outpacing the growth in both Medicare coverage, which rose by 8.1%, and private health insurance benefits, which increased by only 7.1%.
This widening gap resulted in a 15.4% jump in out-of-pocket costs for patients—marking a record high.
Despite the rising financial burden, the proportion of Australians with private health insurance has grown over the past five years, from 44% to 45.2%.
This indicates that the increase in out-of-pocket expenses isn’t due to fewer people being insured, but rather escalating healthcare costs coupled with a shrinking share of expenses covered by Medicare and private health funds.
Additionally, private health premiums are rising faster than benefits.
Over the past five years, premiums increased by 15.1%, while health fund contributions toward hospital and general treatment services have risen by only 13%.
On 1 April 2025, private health insurance premiums will increase by an average of 3.73%.
Depending on their health fund, Australians could pay an additional $3.73 or more for every $100 in premiums they currently pay.
This information was first seen on https://www.money.com.au/.