Calculating the Impact of the Increase in Health Insurance Premium Prices on Your Wallet

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Key Points

Health insurance premiums have been approved to rise 3.73 per cent on average from April.
A single person with gold hospital cover would have to pay an extra $110 a year.
Insurers had petitioned the government for a 6 per cent rise.

The federal government has signed off on a private health average industry premium increase of 3.73 per cent from April, Health Minister Mark Butler announced this week.

This would mean Australians paying on average $110 more a year for average-priced gold hospital cover, financial comparison site Canstar analysis shows, but others would have to front up hundreds more.

The figure is the largest increase since 2018, but less than the 6 per cent jump some insurers had petitioned the government for.

Despite the average 3.73 per cent increase, some insurers will increase premiums by more than that figure, and others less.

Around 15 million Australians have private health insurance and a total of $29.9 billion was paid in premiums in the 12 months to 30 September 2024, according to the federal health department.

Private Healthcare Australia chief executive Rachel David said insurers needed to raise premiums to keep up with inflation.

“The increase of 3.73 per cent, agreed with federal regulators, is as low as the health funds can go without seriously squeezing private hospitals and other providers,” she said.

How much more will private health insurance cost you?

Canstar’s analysis shows a family on the average-priced gold hospital policy could face an annual increase of $217, as the average price rose from $5,823 to $6,040 if the 3.73 per cent increase is applied.

The average cost for a single person on gold hospital cover would rise from $2,950 to $3,060 a year.

The highest average price rise in April will be from Police Health Limited at 9.56 per cent while the lowest will be 1.91 per cent from Health Insurance Fund of Australia, according to the Department of Health and Aged Care. Both are not-for-profit insurers.

Australia’s largest health insurer, the for-profit Medibank Private, has slated a 3.99 per cent increase in premiums.

Canstar’s data insights director Sally Tindall said that customers won’t be getting anything extra despite paying more for their insurance products.

“Really what this price rise is reflecting is the fact that the cost of medical services is on the rise,” she said.

“Unfortunately, that doesn’t mean that people will suddenly be getting more from their health insurance. But that said, if they go and see if they can find a more competitively priced policy from a different provider, they could actually find that they see their premium amount drop instead of rise depending on what kind of deal they’re on currently.”

In 2024, the government announced an average annual price increase of 3.03 per cent — however, Canstar analysis of pre- and post-April 2024 prices shows the average cost of a single person’s gold cover rose by 11.2 per cent, while the average cost of a family basic policy dropped by 0.7 per cent.

How have insurers responded?

Some insurers have already announced price hikes well above the average, with nib announcing an average rise of 5.79 per cent.

The insurer’s chief executive Ed Close said premiums were driven up by hospital costs including wages and supplies increasing, as well as the renewal of contracts with private hospitals.

“Those contracts ensure access to services and limit out-of-pocket costs, which is important when members’ budgets are already stretched,” he said.

Meanwhile, HBF announced a 2.8 per cent average premium increase.

“As a not-for-profit health insurer, we are focused on keeping premium increases as low as possible for our members, especially with cost-of-living pressures affecting household budgets,” chief executive Lachlan Henderson said.

Australian Private Hospitals Association chief executive Brett Heffernan said the premium increase — based on an average annual cost of $4,000 — would deliver a $2.2 billion windfall to insurers, almost $150 per policy.

“But the providers of healthcare treatments and services, private hospitals, don’t expect to see much of it in payments for treatments and care.”

With additional reporting by Australian Associated Press.