Deafening political silence on private hospital crisis as insurance premiums soar by up to 12%

A 3.73% average hike in private health insurance premiums was approved by Federal Health Minister Mark Butler MP and took effect on April Fools’ Day – but the real sting is hidden in the details. According to Choice, gold policies under the top five insurers* have surged by more than12%, exposing a widening gap between what Australians pay and what value they receive in return.

The Australian Private Hospitals Association (APHA) CEO, Brett Heffernan, emphasised “The health insurance industry has short-changed private hospitals by billions – that is, refusing to pay in full for the treatments and care hospitals provide to the tune of $3 billion over the last three years.

“The consequences of the Federal Government leaving insurers to their own devices is more than 70 service closures, including maternity and mental health units, in addition to 20 private hospitals closing entirely.”

This funding shortfall is a direct threat to patient care. The 15 million Australians who pay a staggering $29.9 billion in health insurance premiums are left with fewer services, fewer choices, and declining hospital quality. Underfunded hospitals, running at a loss or barely breaking even, cannot invest in the infrastructure, staff, and medical innovations patients rely on.

Professor Stephen Duckett from the University of Melbourne was blunt about the insurance industry’s failure. “People are saying, I’ve got private insurance that hasn’t done for me what I wanted, and that’s not government’s job to fix – that’s the private insurance industry’s job to fix,” he stated.

Yet, the political response has been deafening silence. Despite more than two-and-a-half years of briefings on the deepening crisis, Minister Butler has failed to take timely action. The federal election campaign has entirely ignored the urgent need for reform between private hospitals and insurers.

Meanwhile, Shadow Health Minister Senator Anne Ruston has accused the Labor government of fueling the crisis, but Opposition Leader Peter Dutton has yet to commit to holding the insurance industry accountable.

The numbers paint a grim picture. As Heffernan explained, “The Health Minister could have picked up the phone to the insurers in 2022 when the shortfall in funding from the insurers was $660 million. But with no pushback from the Minister, that ballooned to $1.135 billion in 2023 and last year was a whopping $1.254 billion.

“To be clear, the issues affecting private hospitals are not volume-related. When you’re being underpaid for the treatment you provide, then performing 10, 100 or 1,000 procedures doesn’t matter much, in fact, the more you do only compounds the funding shortfall.”

With private hospitals handling 70% of all planned surgeries, 1.6 million medical treatments annually, 54% of chemotherapy, 62% of acute mental health care, and 80% of hospital rehabilitation, the failure to act on insurer-driven underfunding threatens to push the public hospital system into collapse.

How much worse will it get before the government moves beyond the talkfest and steps in with real solutions?

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*Bupa, HBF, HCF, Medibank and nib