Australians with hospital cover are paying 71% more in out-of-pocket costs compared to five years ago, according to new data analysed by Money.com.au, an Australian financial comparison platform.
Out-of-pocket costs — gap payments — cover the portion of medical bills not funded by health insurance. Private patients may pay out-of-pocket costs when treated in a public or private hospital.
The cost of in-hospital services in Australia has risen by 22% over the last five years, but Medicare coverage has only increased by 18%, and private health fund contributions by just 12%, Money.com.au says in a statement. This means gap payments are rising three times faster than hospital costs in Australia — forcing patients to pay more from their own pockets.
The average gap for known costs (disclosed to patients upfront) has risen from A$99 ($63) to A$135 in five years, while unknown costs (not disclosed beforehand) have jumped from A$418 to A$685.
Aussies with hospital insurance
Health funds and Medicare are covering a smaller share of hospital expenses, so Aussies with hospital insurance are facing larger out-of-pocket costs — on top of a 15.1% increase in premiums over the past five years.
Money.com.au’s finance expert, Mr Sean Callery, says Australians may be questioning the value of their hospital cover and even consider dropping it altogether.
“Aussies are paying higher premiums for private hospital cover but are left covering a much larger share of medical bills than they were five years ago. This is hardly what you’d call a great return on the significant investment individuals and families are making in private health cover,” he said.
Mr Callery says people dropping private health insurance would put more pressure on public hospitals and create a feedback loop. “This could increase demand on already stretched public hospitals, leading to longer wait times for elective surgeries and other non-urgent treatments. It may create a cycle, where longer public wait times push people back to private health insurance, despite the rising costs, to access faster care and more options,” he said.
Despite rising gap payments, more than 12.3m Australians (45% of the population) now have private hospital cover — a notable 10% increase over the past five years.
Data analysed by Money.com.au for the statement are from the Australian Prudential Regulation Authority (APRA) quarterly private health insurance statistics for the period of September 2019 to September 2024.
Money.com.au was founded by industry experts in 2019. Its goal is to provide people and businesses with financial education and access to financial products.