Profit put before patients

APHA's opinion editorial published in the Herald-Sun and Courier-Mail.

WITH reports that private health insurance premiums could rise by an average 5% this year, private hospitals warn that the Federal Government must act to head off another annual profit boost for insurers.

Consumers are learning that the steeper premiums they pay each year do not translate into meeting the higher costs for the treatment and care they receive in hospitals. In fact, the 12.6 million Australians with private hospital cover have been paying more but getting less for it.

Big exclusions in 70% of policyholders' cover means they are also up for hefty out-of-pocket costs due to their insurance not meeting their needs. Meanwhile, soaring profits and management fees charged by insurers continue unchecked.

Both Medibank and BUPA's average premium increases in 2024 and 2025 were above the industry figure. Medibank scored 3.31% and 3.99% increases, while BUPA was granted 3.61% and 5.1% hikes.

They both saw profits climb. Medibank's take surged by $21.7 million to $573.7 million in after-tax profits last year. BUPA's profits jumped $182.1 million to $593.9 million over the same 12 months.

Despite these massive windfalls, Medibank barely shifted the dial on the benefits ratio paid to private hospitals – up just 1.3% on 2024 to come in at 87.1% for the year. BUPA went backwards, paying out even less than 2024, down 0.45% for 83.3%.

Clearly the system is broken and open to rampant abuse by insurance companies.

Despite healthcare costs soaring, most insurers, including Medibank and BUPA, fell well short of the pre-Covid benefits ratio of 90%. Management expenses from the premiums their customers paid saw Medibank siphon $583.2 million and BUPA $903.5 million in 2025 alone.

We are about to mark the 12-month anniversary of Federal Health Minister Mark Butler's ultimatum to the insurers to dramatically lift their payments to private hospitals in the wake of these record profits and higher management fees.

After a year of being on notice, insurers appear to have thumbed their noses at the Minister. The Federal Government must restore pre-Covid benefit levels and force insurers to pass on the premiums to those providing healthcare.

Even at 90%, returns to hospitals are likely to be inconsistent.

A Mandatory Code of Conduct for contracting between hospitals and insurers must accompany the 90% guarantee.

Brett Heffernan is chief executive of the Australian Private Hospitals Association. Published in the Herald-Sun and Courier-Mail newspapers on 13 February 2026.

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