Join our campaign to reduce the gap
National Seniors Australia (NSA) is campaigning to reduce out-of-pocket health care costs for all older Australians.
NSA's own research highlights growing unrest about the unaffordability of private health care. While many older Australians value private health insurance, they are frustrated by rising premiums and increasing out-of-pocket expenses.
NSA is calling for a full Productivity Commission review of the private health system, focused on improving its value and reducing out-of-pocket costs. This aligns with the Federal Government's broader focus on productivity in next term of parliament.
We are also calling for an increase in the Private Health Insurance Rebate for low-income earners and the establishment of a targeted Seniors Dental Benefits Scheme.
You can find out more and join the campaign by clicking here .
Australia's private health system is facing significant challenges, with patients experiencing escalating out-of-pocket costs and tensions rising between hospitals and insurers. Rising premiums and out-of-pocket costs are symptoms of a sick system that could undermine affordability for consumers.
Recent Australian Prudential Regulation Authority (APRA) data highlights a substantial increase in the average amount patients pay out-of-pocket for hospital care.
According to data for the March 2025 quarter, the average out-of-pocket (gap) payment for a hospital visit for privately insured patients was $470.80. This figure includes payments for medical services as well as any excess or co-payment amounts related to hospital accommodation.
Worryingly, this represented an increase of 10.4% compared to the same quarter of the previous year.
While the average out-of-pocket payment for medical services for privately insured patients where a gap was paid was $270.81, the amount of this gap can vary depending on the medical specialty group, with orthopaedic services having the largest average gap at $760.43.
Medical gap payments also varied by state and territory. The average gap payment across all services was highest in the Australian Capital Territory at $103.86, followed by the Northern Territory ($73.59), Queensland ($38.35), New South Wales ($37.97), Victoria ($31.90), Tasmania ($29.91), Western Australia ($29.67), and South Australia ($25.11).
This increase in costs for patients occurs within a climate of increasing financial pressure on private hospitals, and a clash of viewpoints between hospitals and health insurers.
Catholic Health Australia (CHA), which represents a large group of non-government, not-for-profit health providers operating many private hospitals, says insurers are making large profits at the expense of hospitals and patients.
"Health insurers are making enormous profits and returning less to patients and the hospitals that deliver the services," CHA director of health policy, Dr Katharine Bassett, said in a media statement.
"This means more of patients' premiums are being spent on profits and overheads, not care."
CHA argues that a major reason for the viability challenges faced by private hospitals is the lack of adequate funding from insurers.
Problems in the sector were highlighted last week when it was reported that Healthscope, Australia's second-largest private hospital operator, had entered receivership.
Its CEO, Tino La Spina, identified three core issues contributing to the collapse: excessive secured debt, out-of-market rental payments, and the industry structure where private health insurers have accumulated significant funds over recent years without putting them back into the private sector.
CHA noted that insurers amassed a substantial profit of $431 million in the March quarter while 37 hospitals were in receivership and others faced closure.
However, health insurers beg to differ.
Private Healthcare Australia (PHA), which represents health insurers, said private hospitals received a record $12.3 billion from insurers in the year to March 2025 - an increase of 7.7%.
PHA noted that insurers returned 85 cents for every dollar paid in premiums in the year to March 2025, which is close to the 20-year average.
PHA's chief executive officer, Dr Rachel David, suggested that trends such as the high cost of specialist doctor consultations are dampening demand for private hospital care, and that hospitals need to adapt their business models.
Federal Health Minister, Mark Butler, has indicated he is prepared to intervene.
In a recent interview on ABC Radio Perth, he said there would be no public bailout of Healthscope.
"This was a private equity play by a very big overseas private equity firm that tried to make money out of private hospitals here in Australia," he said.
"They structured the company in a very bizarre way in terms of the rent that it was paying, the rental on equipment, and it's all really sort of come undone for them."
Mr Butler noted that Healthscope had access to sufficient funds to run the hospitals for 12 months and added that "there will be some reflection on whether overseas private equity firms are the right people to be running such a crucial part of our healthcare system".
He also said he expected private health insurers to find a way to pay more of their income to private hospitals.
Mr Butler noted that the percentage of insurer income going into hospitals has dropped, while insurer profits and management expenses have risen.
He said he had given insurers a few months to correct this ratio back to its historical average, and if they haven't done so to his satisfaction, he would look at taking regulatory action.
He acknowledged the significant taxpayer support provided to the private part of the health system through the $8 billion annual private health insurance rebate, saying this gave the government "skin in the game".
The Minister said he recognised that private hospitals are an important part of the healthcare system and they must be viable.
He also acknowledged the competitive tension between hospitals and insurers, saying his job is to ensure that the interests of patients are given priority.
National Seniors Australia (NSA) is campaigning to reduce out-of-pocket health care costs for all older Australians.
NSA's own research highlights growing unrest about the unaffordability of private health care. While many older Australians value private health insurance, they are frustrated by rising premiums and increasing out-of-pocket expenses.
NSA is calling for a full Productivity Commission review of the private health system, focused on improving its value and reducing out-of-pocket costs. This aligns with the Federal Government's broader focus on productivity in next term of parliament.
We are also calling for an increase in the Private Health Insurance Rebate for low-income earners and the establishment of a targeted Seniors Dental Benefits Scheme.
You can find out more and join the campaign by clicking here .
