The facts about health insurance and private hospitals (version two)

Like many businesses, some private hospitals have had a difficult time with lower demand for their services due to COVID-19 and rising costs for staff and supplies. However, they have received significant assistance.

Since the pandemic, the Australian Government provided more than $1.5 billion to the sector in viability payments during the pandemic and health funds provided more than $270 million outside of standard contracts for their members’ healthcare.

If an essential private hospital service in an area of need is at genuine risk of closure, health funds will work with all involved to ensure ongoing access. Health funds need a viable private hospital sector to serve their members.

Federal Government data also shows hospitals have opened during that time. Australia has more private hospitals than it did six years ago, and hospitals are continuing to open across Australia. For example, in the first two months of 2025, Ramsay Health Care opened new services in Albury-Wodonga on the NSW Victorian border, in Brisbane, and in Caloundra in Queensland. Adeney Private Hospital was also opened in Melbourne.

There is no evidence that health funds have underfunded private hospitals or owe them money, and there is no reference to this in APRA reports. APRA data shows health funds paid $18.73 billion in 2024 for members’ hospital treatment, up 8% on the year before. This was higher than health inflation (the changing cost of health services) which rose 4% during the same period.

The average premium increase is 3.73% from 1 April 2025, which is lower than the rising rate of expenditure by health funds for their members’ claims, as well as the rate of health inflation (the changing cost of goods and services in the health sector which is 4%).

There is no evidence that health funds have underfunded private hospitals. APRA data shows health funds have consistently paid more to hospitals each year for their members’ care since 2022.

Australian Prudential Regulation Authority (APRA) shows in 2024, health funds returned a high of 88 cents on average to members for every dollar spent on premiums over the June 2024 quarter. This is the highest return of any type of insurance. Mandating a claims ratio of 90 cents in the dollar is unrealistic and would send some health funds broke.