Millions of Australians with private health insurance are set to face a significant increase in their annual premiums next year, marking the steepest rise in more than five years.
The change comes as private health insurers prepare to submit their proposed premium adjustments to Federal Health Minister Mark Butler for approval.
Analysis by Money.com.au indicates that the rise will closely align with current health inflation, ending a half-decade period in which premium growth had been artificially restrained. The sector has reportedly maintained lower increases since 2021, largely due to the pandemic and regulatory guidance, but experts warn that those buffers have now run out.
Chris Whitelaw, general manager of health insurance at Money.com.au, explained that “the private health sector’s pricing buffer built up during the pandemic is being exhausted. Hospitals are facing higher costs, wages are rising, and insurers need to recalibrate premiums to remain financially sustainable.”
Health Minister Mark Butler urged insurers to ensure that any increases are justified and that policyholders receive value for money. He highlighted the need for transparency in the setting of premiums, particularly as Australians continue to face broader cost-of-living pressures.
The proposed changes are expected to affect around 15 million Australians who hold private health insurance. Analysts warn that some families could face increases of several hundred dollars annually, depending on their policy coverage and insurer.
Industry insiders say that soaring hospital operating costs, combined with rising wages for healthcare staff and medical inflation, are driving the upcoming premium adjustments. With a growing demand for private healthcare services and the lingering financial effects of the pandemic, insurers are now balancing the need to cover rising expenses with maintaining affordability for policyholders.
The developments have sparked debate about the affordability of private health insurance and the role of government oversight in controlling costs. Public scrutiny is expected to intensify as insurers formally submit their proposals to the Minister and the government evaluates the impact on households nationwide.
