APRA shows status quo for private hospitals

THE latest update from the Australian Prudential Regulation Authority (APRA) shows that for the 2024-25 financial year, the benefits ratio paid by health insurers to private hospitals was 84.25% - well short of the 88% benchmark. The insurers have not delivered against that annual return since 2019-20.

The data for the last quarter of the year shows an increase in the benefits ratio from 80.68% in March to 87.87% in June, with the annual rate at 84.25%.

This mirrors APRA's results last year. March 2024 saw the ratio at 79.4% and in June it was 87.67%. The annual ratio for last year was 84.05%. The 2023 results are not broken down by quarters, but the annual ratio was 81.63%.

Benefits ratios 2022-23 to 2024-25

Benefits ratio 2022-23 to 2024-25.

"The upshot is the benefits ratio to private hospitals has not materially improved since last year. In fact, the average $1 billion-plus a year shortfall between the cost of providing care and what the insurers pay remains entrenched at $1.1 billion in 2024-25," APHA CEO Brett Heffernan said. "That is not sustainable.

Data sources: Consumer Price Index, Australia, ABS (2025); Quarterly Private Health Insurance Statistics, APRA (2025), (released 29 August 2025) (Due to hospital treatment benefits being measured per episode, prosthesis benefits are not included as they are not reported per episode. Excluded: medical benefits to medical practitioners; benefits for nursing home type patients, hospital substitutes, prostheses and public hospital treatment).

"The real test for Federal Health Minister Mark Butler's March ultimatum to health insurers to lift the benefits ratio will come in the next, and subsequent, quarterly results.

"The Minister's recognition that the ratio needs to go up further and be more consistent across insurers, is welcome. How that is to be achieved is unclear.

"APRA's latest data also shows that the profits of the insurers continue to soar, with 2024-25 coming in at a near-record of $2.13 billion. This is separate from management expenses gouged from customers' premiums, which are yet to be reported, but have run at $3.5 billion a year.

Health insurers' after-tax profits

Health insurance after-tax profits.

"The health insurance industry is raking in cash hand-over-fist, while still coming up over $4 billion short in covering the costs of treatments and care for privately insured patients since 2022. That's 12.5 million customers with private hospital cover who are paying more but getting less."

-ENDS-

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