Minor uptick in benefits ratio still falls short

A MODEST 2.5% bump in payments flowing from health insurers in the September 2025 quarter compared to the same time last year is a positive sign, but still well short of requirements, the Australian Private Hospitals Association said today.

"This is the first sign Federal Health Minister Mark Butler's March 2025 ultimatum to health insurers to increase their benefits payments to hospitals or face regulation may be having some effect," APHA CEO Brett Heffernan said. "But, at 87.6%, the insurers are still not meeting the 88-90% target required.

"It has taken sustained political pressure and shaming of health insurers in exposing their record profits and exorbitant management fees, all siphoned from the premiums families pay, to achieve this modest improvement.

"Yet, it still falls short of meeting the costs private hospitals incur in providing treatment and care, let alone providing any margin repair after four years of chronic underpayments.

"This slight uptick, recorded by the Australian Prudential Regulation Authority, equates to an extra $205.5 million flowing to private hospitals from insurers, adjusted for differences in activity, compared to September 2024.

"At face value it's encouraging, but over the last few years private hospitals have been underpaid by more than $1 billion each year relative to cumulative CPI growth, a shortfall that has left many private hospitals operating under extreme financial pressure.

"The national average payment of 87.6% disguises what will be significant variation across hospitals. Many hospitals, particularly smaller and regional facilities, will continue to fall well below the average.

"With the insurers dragging their feet in meeting the Minister's call to action, this latest data underscores the urgent need for the Federal Government to introduce a Mandatory Code of Conduct for insurer and hospital contracting to ensure transparency, fairness and appropriate funding.

"Such a Code with an arbitration model and price transparency would cost taxpayers and patients nothing, but it would make health insurance companies accountable. It would ensure the that funds collected through insurance premiums are returned to patient care, not simply boosting record insurer profits of $2.1 billion in 2024-25 and increasingly dubious annual management fees of $3.4 billion.

"Without enforceable accountability, health insurers will continue to underfund the system, leaving hospitals increasingly vulnerable to closure and patients increasingly stranded on longer public hospital waiting lists.

"A sustainable private health system cannot rely on sporadic improvements or political will to keep insurers in line. A Mandatory Code of Conduct is needed to ensure patients get value for their premiums and hospitals can keep their doors open and invest to provide the standard of care patients expect."

-ENDS-

Next Media Centre:
9/12/2025 Private health funding cure likely to kill the patient

Previous Media Centre:
13/11/2025 Deflection doesn't absolve insurers on gap costs