2026 premium hike cannot be another insurer cash grab

WITH private health insurance premiums to rise by an average 4.41% in 2026, private hospitals are warning that the Federal Government must move to head off just another annual profit boost for insurers.

"Consumers are fast 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," APHA CEO Brett Heffernan said. "There is nothing compelling insurers to pass on premium hikes to meet rising health costs.

"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 their profits explode. Medibank's take surged by $21.7 million to bank $573.7 million in after-tax profits last year. BUPA had a field day with after-tax profits up a staggering $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. Meanwhile, BUPA actually went backwards, paying out even less than 2024, down -0.45% for a paltry 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 with the most members and deepest pockets, fell well short of the pre-Covid benefits ratio of 90%.

"The management expenses applied by Medibank and BUPA 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 record profits and management fees, or he'd make them. After a year of being on notice, the insurers appear to have thumbed their noses at the Minister.

"The Federal Government must now move to restore pre-Covid benefit levels and force insurers to pass on the premiums they receive to those actually providing healthcare for insured patients. Otherwise, this year's premium increases will, yet again, simply line the pockets of insurers.

"Even at an average 90%, returns to hospitals are likely to be lumpy from insurers and inconsistent across the hospital sector, especially for many smaller, independent and specialist hospitals servicing local community needs.

"It is imperative that a Mandatory Code of Conduct for contracting between hospitals and insurers accompany the 90% benefit ratio guarantee. Such a Code, with an arbitration model and price transparency overseen by the ACCC, will shed light on, and put a stop to, the rogue behaviour of insurers that undermines the future of private healthcare.

"The soaring profit-take and exorbitant annual management expenses charged by insurers cannot continue unchecked. With an industry-wide $2.1 billion in after-tax profits and $3.4 billion in murky management fees in 2025, the insurers can deliver the 90% ratio without added pressure on premiums.

"If health insurers stand by their contracting tactics, they should have no issue with being accountable to the ACCC for their conduct."

-ENDS-

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