Health insurance—it is the ultimate grudge purchase, the price of which just keeps going up even as the coverage it offers shrinks.
Health Minister Mark Butler has confirmed that premiums will rise by 4.41% from April 1, compared to last year’s rise of 3.73%.
That makes it the biggest premium rise since 2017 when they went up by 4.84%.
Mr Butler agreed that the rise was prompted by spiralling costs for medical and hospital services, with wages up strongly.
Despite his rhetoric that “decisions about private health insurance premiums must put consumers first,” the reality is that with every increase the growth in numbers of those privately insured falls a bit more and is also accompanied by a more dramatic fall in the level of coverage bought.
Coverage Dwindling While Costs Jump
There has been a massive departure from the all-inclusive “gold coverage” which is increasingly only covering the chronically sick, with many people downgrading their cover to silver, bronze, or even basic cover.
Already 360,000 people have downgraded their policies from gold since 2020 and many are finding to their amazement that they are no longer covered for accident joint replacement surgery, which is one of the most common operations performed in private hospitals.
This is increasingly leading households to question the value provided by private health insurance, along with the increasing battles between insurers and private hospitals, and also following the collapse of Healthscope.
The continuing downgrading of insurance cover means that almost 70% of Australians who have private hospital cover now have exclusions or restrictions built into their policies.
That can lead to all sorts of battles when it comes time for hospital insurance to pay out, with many caught out by the confusing number of exclusions that are far more nuanced and restrictive than the tick and cross indications in the marketing spiel.
Lower Cover Can Provide More
Insurance policies are priced based on a system of tiers – including basic, bronze, silver, and gold – with the procedures covered in each group mandated under legislation.
However, there are surprisingly even some cases in which basic or bronze cover offers superior accident cover than the silver and silver plus policies.
Still, an estimated 15 million Australians still have private health cover and the structure of health insurance which adds a loading to premiums if you have been uninsured helps to prompt a continual downgrading of cover rather than dropping cover altogether.
Membership Growing As Coverage Declines
In announcing Medibank Private’s profit results, chief executive David Koczkar urged the Federal Government to help reduce soaring premiums by speeding up healthcare reforms and investing more in preventative care.
However, he also admitted that the cost-of-living crisis had resulted in widespread coverage downgrades even as overall membership numbers continued to grow.
In Medibank’s case, net resident policyholder growth was 1.9% in 2025 with stronger uptake from customers aged 25 to 30 in the past six months due to promotional activities.
While Mr Koczkar expected overall growth to moderate, he said the entire private health industry needed to come together and reduce the pressure on further price increases.
That would be a clear change from the current system in which the private hospitals and private health insurers consistently cry poor and blame the other party for rising costs.
