Millions of Australians with health insurance will likely pay even more for cover from April 2026, with Compare the Market warning that the Federal Government is already in the process of reviewing proposed price changes from health insurers for the New Year.
It comes as the 12.5 million Australians with hospital cover and 15.2 million with extras cover saw premiums increase by an industry average of 3.73% this April.
While health insurance price changes take effect every year and catch many off guard, Compare the Market’s Economic Director David Koch said a lot happens behind the scenes before Australians are hit with premium hikes.
“As consumers, we usually see the letter in the mail or a message in our email inbox from our insurer telling us that they’re hiking prices. It may feel like a bit of a cash grab, but there’s actually a strict process that health funds go through to get those price changes over the line,” Mr Koch said.
Insurers can only apply to increase their rates once a year and between September and 12 November, health funds have been submitting proposed premium adjustments to the Australian Government Minister for Health and Ageing for consideration.
“These applications aren’t a surefire deal and as we’ve seen in the past, the health minister has knocked back applications that he’s deemed unreasonable,” Mr Koch said. “But the important thing is that each and every application is assessed on individual merits and only approved if the Minister believes the increase is justified.
“While we should have further clarity around 2026 increases by 31 January, this date can blow out if insurers are told to go back to the drawing board with their pricing proposals.
“Aussies deserve answers sooner rather than later so they can make some informed decisions, without having to scramble at the last minute.”
While insurers use terms like “premium changes” or “pricing adjustments”, Mr Koch said it was safe to assume that prices would be increase in most cases.
“The Health Minister has admitted that the private hospital sector is facing ‘a number of temporary and systemic challenges’, citing shrinking profit margins and growing costs compounded by a lack of investment in the sector,” Mr Koch said.
“We also know that doctor fees are going up, medical equipment and procedures are costing more and in turn, it’s costing insurers more to pay out claims. Those added costs are usually passed on to consumers.”
While it’s too soon to know how much the industry average increase will be, Mr Koch said Australians should keep a close eye on correspondence from their health insurer for any pricing changes.
“Let’s take the 2025 industry average as an example. The headline figure was 3.73% but the actual amount varied significantly between funds,” Mr Koch said.
“One fund increased premiums by an average of 9.56%, but another was as low as 1.91%. So, the big industry average we all wait for is a bit bogus if you ask me. Look for the premium adjustment in your bill and if the hike is too high, be prepared to switch.”
Mr Koch’s tips when it comes to health insurance.
Shop around – even if you think you’re on a good deal
If you’re hit with a premium hike, compare your options and never accept the increase without doing your research first. You may be able to track down a similar level of cover for less.
Look out for perks and promotions
Insurers want your business and will try to lure people over with a range of perks, including waived waiting periods on extras, free coverage for a few weeks, access to reward programs and more. These deals can add real value, so use them to your advantage. The kicker is that they’re often reserved for new customers only which can lend well to switching.
If you don’t use it, lose it
Rather than ditching cover completely if your premiums increase, cherry-pick what you do use or need and get rid of everything else. A lower-level policy might still cover your essentials without the extra cost.
Similar names don’t always mean a similar product
Just because two policies have similar names, doesn’t mean they’ll always offer the same benefits. Pay close attention to any inclusions, exclusions, waiting periods, benefit limits and excess amounts. It’s all in the policy brochure or available by calling your health fund directly.
For more information, please contact:
Phillip Portman | 0437 384 471 | [email protected]
Compare the Market is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.
