A new Australian Medical Association report reveals Australians are paying more for private health insurance while getting less value in return.
The AMA's latest Private Health Insurance Report Card shows a sector in urgent need of reform, with consumers abandoning gold-tier policies and questioning the value of other policies, all while insurers experience huge profits.
In light of this latest report, AMA President Dr Danielle McMullen has renewed calls for an independent Private Health System Authority to drive sector reform.
“Australia’s health system is valued for its mix of public and private healthcare, but both parts of the system are under increasing pressure,” Dr McMullen said.
“Public hospitals are struggling with a severe logjam crisis, which is pushing more patients towards the private sector. However, runaway insurance premiums, low value offerings and shady tactics like product phoenixing leave customers facing tough choices about the level of cover they can afford.”
The report card shows that every year since 2008, the growth of private health insurance premiums has outstripped inflation, health sector inflation, average weekly earnings and the indexation of the Medicare Benefits Schedule (MBS). Between 2008 and 2024, premiums climbed more than 100 per cent, while MBS indexation — which was frozen for several years from 2013 — increased by less than 20 per cent.
The report card also shows that over the six years to June 2025, insurers increased benefits paid for in-hospital medical treatment by only 18.1 per cent — a modest rise compared with sector profits, which grew by nearly 50 per cent over the same period.
In 2024‒25, insurers returned 84.2 per cent of premiums to consumers as benefits — well below the 2019 level of 88 per cent. The AMA is calling on the federal government to mandate insurers to return at least 90 per cent of private health insurance premiums back to consumers in the form of benefits.
“Of course, private health insurers must make a surplus to be sustainable, but it is clear they are holding out on Australians while recording significant profits each year. These insurers have ample capacity to increase the benefits paid to patients,” Dr McMullen said.
In further warning signs for the sector, gold-tier policies are in decline as consumers face rising premiums and cost-of-living pressures. Since the start of the COVID-19 pandemic in March 2020, the number of gold-tier policies have dropped by 360,000, despite the overall number of policies growing.
“These trends show that private health insurance is becoming less affordable for many Australians — and we are already seeing the drastic effects of this, with at least 14 private maternity units closing over the past five years,” Dr McMullen said.
“The need for a Private Health System Authority to better regulate the sector and drive long-term reform has never been more crucial. There are too many bodies involved in the regulation of private health — a single, independent authority would provide a unified and coherent approach.”
