Skip to main content

Mark Butler rejects private health insurers' proposed premium increases

Mark Butler walks down a corridor at parliament house

Mark Butler has for the second time rejected private health insurers' proposed premium increases.  (ABC News: Ian Cutmore)

In short: 

Federal Health Minister Mark Butler has rejected private health insurers' proposed premium increases for the second time in months. 

He says the current submissions are not reasonable, but the peak body for health insurers says funds cannot absorb rising costs. 

What's next?

Health insurance premiums are due to increase on April 1. 

Health Minister Mark Butler has again ordered private health insurers to go back to the drawing board and come up with a more "reasonable" premium increase, as the government tries to fend off a political headache on the eve of a federal election.

The next premium hikes are scheduled to take effect on April 1, and any rise above inflation risks a political problem for the government in the lead-up to an election that will be fought on cost-of-living issues.

The minister must approve the annual premium rises, which will impact more than half of the Australian population who have some form of private health insurance.

"It is my responsibility as health minister to ensure that any private health insurance premium increase is justified and proportionate," Mr Butler said.

"Based on the resubmissions the Department of Health received, I am not inclined to currently approve their proposed premium increases.

"I've written to a number of private health insurers and asked them to resubmit a more reasonable figure that is in the best interest for Australian consumers."

Late last year, Mr Butler wrote to the 29 health insurers in Australia, knocking back their proposals for premium increases.

Insurers' peak body warns industry could go broke

Health insurance premiums rose an average of 3.03 per cent last year. However health funds argue the costs they are paying out increased by between 8 to 10 per cent last year.

Private Healthcare Australia's Ben Harris said funds could not absorb that gap "forever".

"Nearly every dollar that comes into health insurance goes back out to hospitals, to doctors, to physiotherapists to dentists," he said.

"So the more money that health insurers need to pay out, the higher the premiums coming in need to be.

"Having a health fund go broke is in no-one's interests."

Mr Harris would not be drawn on the premium increase bids currently on the table, saying health funds were not allowed to reveal them because of competition law and government regulation.

But he argued funds were seeking to keep premiums "as low as possible" in the grip of a cost-of-living crisis.

"That can't happen in isolation. We need the costs of health care to be controlled as well, and I know the minister and his team are working pretty hard on that at the moment as well," Mr Harris said.

Health inflation typically outstrips cost increases for the overall economy, placing pressure on the system across the board.

The cost of health services rose 4.8 per cent in the year to September 2024, according to the Australian Bureau of Statistics (ABS), while overall inflation rose 2.8 per cent.

"We know we need lower premiums, and the minister is right to ask us to do whatever we can, but we also need to reduce waste and low-value care in the system," Mr Harris said.

A record 55 per cent of the population now has some form of private health insurance cover, according to the most recent figures from the Australian Prudential Regulatory Authority.