Australian Health Insurance Trends

More Australians are taking out private health insurance than ever before, with the biggest boom in the 25 to 29 age group. 

However, as coverage expands, so do premiums. Australians are paying more for health insurance with 2024 seeing the steepest average annual health insurance premium increase since 2019. 

We’re also paying higher gap payments for both hospital and extras treatments. But some insurers are easing the pain with increases in average hospital and extras benefits paid out.  

Health insurance coverage surges among 25-29 year olds

Private health insurance in Australia is widespread with more than half of the population covered in 2022-23. Slightly more Australians hold hospital-only or combined cover than people with extras-only cover. 

Coverage among younger adults, specifically those aged 25 to 29, is on the rise. However, there has been a slight decline in coverage among people aged 55 to 59. 

The largest five health insurers dominate the Australian health insurance market, and accounted for more than three quarters of total benefits paid.  

• More than 14.5 million Australians have some form of private health insurance. That’s around 55% of the population.

• A little over 45% of Australians hold hospital only or combined cover. 

• Around 10% of Australians hold extras-only cover. 

• Insurance coverage grew by 8.5% among people aged 25 to 29 . 

• Insurance coverage decreased by 0.3% among people aged 55 to 59.

• The five largest health insurers in Australia provided cover to 81.6% of Australians who hold private health insurance.

• The five largest health insurers accounted for 79.4% of total health fund benefits paid. 

Hospital-only cover provides insurance for in-hospital treatments. It typically includes the costs of staying in a private hospital or as a private patient in a public hospital, choice of doctor and reduced waiting times for elective surgery, and coverage for a wide range of hospital treatments, depending on the policy level. 

Extras-only cover (also known as ancillary cover) provides insurance for a range of non-hospital healthcare services that are generally not covered by Medicare. This typically includes dental care, optical services, physiotherapy, chiropractic, and other therapies.

Combined cover (also known as hospital and extras cover) includes both hospital cover and extras cover. 

Australians are paying higher health insurance premiums

In 2022-23, Australians paid higher average health insurance premiums than the year before. However, the same period also saw increases in average hospital and extras benefits paid out by insurers.  

Looking ahead, the average annual health insurance premium increase for 2024 marks the first time since 2019 that this rate has exceeded 3%. 

These trends highlight a gradual but consistent increase in both the cost and value of private health insurance in Australia.

• Australians paid around $27.5 billion in private health insurance premiums. This is an increase of 3.3% from 2021-22. 

• Average 2.9% premium increases in 2022-23 were slightly higher than 2.7% in 2021-22.

• Health insurers paid 5% more on average in hospital benefits per policyholder in 2022-23 than in 2021-22. 

• Health insurers paid 8.4% more on average in extras benefits per policyholder over the same period. 

• The average annual health insurance premium increase for 2024 is 3.03%.

• 2024 is the first year since 2019 that the average annual health insurance premium increase was more than 3%. 

Hospital benefits refer to the amount of coverage provided for treatments and services received as an inpatient in a hospital. The extent of hospital benefits depends on the level of cover (basic, bronze, silver, or gold), with higher levels generally offering more comprehensive coverage.

Extras benefits (also known as ancillary benefits) refer to the amount of coverage provided for a range of non-hospital healthcare services. The specific services covered and the amount of benefit paid for each service depend on the extras policy level and the insurance provider.

The average annual health insurance premium increase is the government-approved percentage by which health insurance premiums are adjusted each year in response to factors like rising healthcare costs, advancements in medical technology, increased use of healthcare services, and inflation. 

Average gap payments for hospital and extras treatments are increasing 

Over the past few years, Australian policyholders have faced a notable rise in out-of-pocket costs associated with private health insurance. 

In 2022-23, both hospital and extras treatments saw significant increases in average gap payments. 

These increases highlight a growing financial burden on individuals with private health insurance, and underscore the importance of finding the best value health cover to suit your needs and budget. 

• In 2022–23, the average gap payment for hospital treatment increased by 7.3% from the previous year. 

• The average gap payment for extras treatment over the same period also increased by 7.3%. 

• At June 2023, the average gap payment for hospital treatment was $408.38.

• This is $27.90 more than the average gap payment for hospital treatment at June 2022, and $60.85 more than the average gap payment for hospital treatment at June 2021. 

• At June 2023, the average gap payment for extras treatment was $58.33.

• This is $3.96 more than the average gap payment for extras treatment at June 2022, and $5.48 more than the average gap payment for extras treatment at June 2021. 

Gap payments refer to the out-of-pocket expenses that patients incur when the cost of a health service exceeds the amount covered by Medicare and their health insurance policy. Gap payments can vary depending on the type of healthcare service, the healthcare provider's fees, and the patient's health insurance coverage.

The best value health insurance is just a quick click away. 

Disclaimer

This guide is opinion only and should not be taken as medical or financial advice. Check with a financial professional before making any decisions. Compare Club compares selected products from a panel of trusted insurers. We do not compare all products in the market.

Sources

Private Health Insurance Report to the Senate, ACCC Annual average price changes in health insurance premiums, Health.gov.au

Chris Stanley is the sales & operations manager of health insurance at Compare Club. With extensive experience and expertise, Chris is a trusted leader known for his deep understanding of health insurance markets, policies, and coverage options. As the sales & operations manager of health insurance, Chris leads a team of dedicated professionals committed to helping individuals and families make informed decisions about their health insurance needs.

Meet our health insurance expert, Chris Stanley

Chris's top health insurance tips

• 1

  Australia’s public health system is world-class, but wait times for public hospitals can be long, inconvenient - and leave you living in constant pain while you wait.

• 2

  An appropriate private health insurance policy can speed up your surgery, relieving your pain sooner.

• 3

  Family health cover means your children are covered under the same policy as you.

• 4

  Many health insurance policies come with a 12-month waiting period for pregnancy-related cover, so it’s a good idea to get a family policy organized well before starting your family. This means your child will be covered from birth until at least their early twenties (depending on which health fund you select).