Millions of Australians could soon see their private health insurance bills go up again. The federal government is expected to approve the biggest premium increase in almost a decade, as mounting costs and a struggling hospital sector put fresh pressure on insurers — and on the wallets of ordinary families.
The Biggest Hike Since 2017
Next year’s rise is shaping up to be steep. Analysts expect average premiums to increase by more than 4% in 2026, which would be the largest jump since 2017. Health Minister Mark Butler has already warned that higher prices may be unavoidable, citing the rising costs of running private hospitals and paying medical staff.
Australia’s 15 million private health insurance customers have already seen prices climb steadily over the years. The last hike, approved for April 2025, lifted premiums by 3.7% — the first increase above 3% since the pandemic. Now, insurers are pushing for an even larger adjustment to keep up with inflation and maintain profit margins, reports SMH.
Insurance Industry Under Pressure
The country’s private hospital sector is in trouble. The collapse of Healthscope, one of Australia’s biggest operators, exposed deep financial cracks. Hospitals have faced rising wage bills, higher energy costs, and increasing demand for complex care. In New South Wales, nurses are asking for a 35% pay rise over three years, arguing that staff shortages and burnout are pushing the system to breaking point.
But while hospitals say they need more support, insurers claim they’re already under strain. Many have introduced at-home treatment programs to cut hospital admissions and help reduce costs. These programs let patients recover from surgeries or manage chronic conditions without staying overnight — saving both patients and insurers money. Yet, for hospitals, fewer admissions mean less income, creating a widening financial gap.
Less Money Reaching Hospitals
Before the pandemic, about 90% of hospital treatment premiums were paid back to hospitals as benefits. That figure has now dropped to 83%, according to government data — a major shift that’s left private hospitals struggling to fund operations and staff. Butler said insurers need to do more to support the “long-term viability” of the system, describing the gap between rising costs and payouts as unsustainable.
A Balancing Act for the Industry
Analysts from UBS estimate that premium increases of 4.4% to 4.7% may be required to stabilise industry margins. Others warn the figure could climb even higher, surpassing inflation. For consumers, it means another hit to the household budget at a time when groceries, rent, and electricity bills are already squeezing incomes.
The government is expected to announce the finalised 2026 premium increase in late January. For now, insurers, hospitals, and patients are all watching closely — each hoping the numbers land in their favour. But one thing is clear: Australia’s private health system is feeling the strain, and the next few months will determine just how deep the cuts — or the costs — will go.
