Since 2020, more Australians have been purchasing private health insurance, and today more Australians hold hospital treatment cover than ever before. But a closer look tells a different story: fewer policies now offer top-level coverage, exclusions are at record levels, and the overall value of private health insurance is eroding.
The AMA’s 2025 Private Health Insurance Report Card reveals a system increasingly failing to deliver value for money. Premiums have risen sharply – outpacing inflation, wage growth and Medicare indexation – while coverage has narrowed.
Only 15 years ago, few hospital policies contained exclusions; but by 2018 most hospital insurance policies had shifted to include them. That trend of exclusions has continued to rise, with 68.4% of private hospital treatment policies no longer covering all types of care, meaning many Australians are paying more, but are covered for less.
The tiered product system introduced in 2020 – basic, bronze, silver and gold – was designed to simplify choices, but has instead created confusion and contributed to underinsurance. Since then, the number of Australians with gold-tier cover has fallen by 360,000 to just 743,000, despite overall growth in health policy coverage. Many Australians have shifted to silver or bronze policies, which often exclude critical services. Meanwhile, those seeking to purchase insurance for the first time are being priced out of the market for gold-tier policies, which have become prohibitively expensive.
Gold-tier policies, which provide the most comprehensive coverage, are particularly susceptible to “phoenixing” – a term used when insurers close an existing policy and replace it with a nearly identical one at a higher price. This tactic bypasses the regulated premium-increase approval process, allowing insurers to raise costs without ministerial oversight and leaving consumers paying more. The AMA welcomes legislation introduced in February to outlaw this practice.
At the same time, a smaller share of premiums goes towards covering the cost of care for policyholders. In the 2024-25 financial year, insurers retained nearly 16% of hospital premiums as gross margin – amounting to $3.62 billion – meaning only 84% of premium revenue was paid out as benefits reimbursing care. The AMA continues to call for insurers to be required to return at least 90% of private health insurance premiums to consumers in the form of benefits for treatment.
Every year, these AMA Private Health Insurance Report Cards expose where the system is failing Australians, driving accountability and change, and we will continue fighting hard for doctors, using the strength of our advocacy and influence to push for lasting improvement across the health system.
But these steps, while important, are not enough. There is an urgent need for real reform to tackle the structural issues, which have been ignored for too long, to ensure the sustainability of our entire health system and to protect patient access and choice.
The next reform must be bold. We need a Private Health System Authority – an independent body to lead sector-wide reform. This authority would ensure all stakeholders are heard, and that changes are fair, transparent and sustainable. It would provide the oversight needed to restore trust and deliver value for patients.
Australia’s healthcare system is built on a unique balance of public and private services that gives Australians choice and access, but that balance is fragile. If Medicare rebates remain stagnant, public hospitals continue to struggle, private hospitals remain under pressure and insurers withhold value from Australians, then more patients will miss out on the care they need. That is not the future Australia should accept.
