Health insurance statistics at a glance
- More than 15.2 million Australians have some form of private health insurance
- 45% of the population have Hospital cover, while 55% are covered by an Extras policy
- Around $6.7 billion was paid out in health insurance Hospital benefits in the three months to June 2025
- Around $1.69 billion was paid out in health insurance Extras benefits in the same period
- The most common reason for taking out private health insurance is to avoid the Medicare Levy Surcharge
- The most common reason for people not having private health insurance is the cost
- Western Australians are the most likely to have private health insurance
- People in the Northern Territory are least likely to be covered
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Health insurance premiums to climb back toward 4% in 2026 — adding up to $216 a year for families
Our latest analysis shows next year’s private health insurance premium increase could sit between 3.9% and 4.4%.
Data shows that although premium increases have sat below health inflation since 2021, the gap has been steadily closing. If health inflation stays near the 4% mark this year, the 2026 premium hike could fall in line with or even surpass health price inflation.
A 3.9%–4.4% premium rise would see singles on a combined hospital and extras policy pay an extra $127–$144 a year, while families would face an additional $191–$216 annually. These estimates are based on the average combined single policy costing $3,264 a year and the average combined family policy costing $4,908 a year.
Money.com.au’s General Manager of Health Insurance, Chris Whitelaw, says the return of stronger premium increases will be felt by millions of policyholders.
“What we’re seeing is a reset. Premium increases stayed unusually low for years, and 2026 may be the year they return to a more ‘normal’, but still painful, growth cycle. There’s no doubt that a premium increase of around 4% would be a shock for many policyholders, especially after a few years of softer rises,” he says.
Health insurance coverage in Australia
As of June 2025, more than 15.2 million Australian people are covered by some form of private health insurance policy.
Extras health insurance policies (covering non-hospital treatments) are more popular than Hospital policies.
Around 12.5 million are covered by a combined Hospital and Extras policy, which is roughly the same number of people covered by a Hospital policy. Around 2.7 million people have Extras only cover, which does not cover treatments that are also covered by Medicare.
For Hospital policies, around half of people are covered under a family policy, while 21% have couples cover and a further 24% are covered under a singles policy. The remaining 5% or so have a single-parent policy.
While the overall number of people covered by health insurance has been steadily rising, the portion of the population that’s covered has remained relatively steady for the past decade or so as Australia’s population has also grown.
Graeme Hughes, Consumer Expert at Griffith Business School
"Many Australians are reluctant to take out private health cover due to a combination of factors. Rising premiums, often outpacing wage growth, make the cost-benefit analysis less favourable. Additionally, despite having private health insurance, many still face significant out-of-pocket costs, such as co-payments and excess fees. The limited choice and standardised nature of policies, particularly given the cost of living squeeze, is further dampening consumer enthusiasm."
Graeme Hughes, Consumer Expert at Griffith Business School
Health insurance coverage across Australia
| People with hospital cover | % of population | People with Extras cover | % of population | |
|---|---|---|---|---|
NSW | 3,974,332 | 46.30% | 4,884,708 | 56.90% |
Vic | 2,974,053 | 42.30% | 3,518,794 | 50.00% |
Qld | 2,317,130 | 41.20% | 2,707,758 | 48.10% |
SA | 850,010 | 45.10% | 1,123,987 | 59.60% |
WA | 1,623,165 | 54.20% | 2,042,601 | 68.20% |
Tas | 242,267 | 42.00% | 288,886 | 50.10% |
ACT | 258,024 | 53.80% | 315,243 | 65.80% |
NT | 102,540 | 40.20% | 115,084 | 45.20% |
Survey data from Money.com.au reveals that 33% of Australians would trust AI to give them advice about their health insurance.
Why do people get private health insurance?
The top reason Australians have private health Hospital cover is to avoid the Medicare levy surcharge (an extra tax some people are charged if they don't have an eligible private health insurance policy).
That’s according to a nationwide survey of Australians carried out by Money.com.au in 2024. The second most popular reason was the ability private cover offers people to choose between private public hospital treatment.
For Extras cover, comfortably the top reason for getting a policy is to access dental cover for the likes of check ups and cleans. Accessing cover for optical care and treatments was the second most commonly chosen reason for getting an Extras policy.
This aligns with the treatments covered by Extras policies that have the highest level of benefits paid out to policyholders, with dental and optical being the areas where members get the most money back from insurers.
Nathan Kettlewell, Senior Economics Lecturer at the University of Technology Sydney
"The cost of insurance has been rising rapidly for a long time. It's been increasing by a lot more than wages and more than the cost of other things. So a key factor for consumers in deciding whether to buy the insurance or not is that cost. Whilst the cost continues to rise without some kind of commensurate increase in the value of insurance, you can't really expect the market to grow much further."
Nathan Kettlewell, Senior Economics Lecturer at the University of Technology Sydney
How much do health insurers pay out in benefits?
Private health insurers paid out almost $25 billion in benefits in the 12 months to September 2024. That amount was split between around $18.4 billion on Hospital benefits and $6.4 billion on Extras benefits.
Overall, benefits paid increased by 7% compared to the previous year, with a sharper increase in Hospital benefits (+7.47%) compared to the growth in Extras benefits (5.67%).
Over the past decade, Hospital benefits have grown by 46.55%, while Extras benefits have risen by a similar level of 47.64%. To put that into context, inflation in the wider economy has risen by less than 34% in the last 10 years.
Extras benefits paid are more evenly distributed by age, with younger people more likely to utilise services like dental treatments at similar rates to older people.
Speaking of dental treatments, these are by far the most common reason a benefit is paid on Extras cover, dwarfing the other main treatment types.
Health insurance out-of-pocket costs (gap payments)
While the level of benefits paid out on health insurance policies has been rising, so too are the ‘gap payments’.
This is the amount the patient/policyholder must pay towards their own treatment on top of their policy excess.
- Australians with Hospital cover are paying 71% more in out-of-pocket costs compared to five years ago, according to data analysed by Money.com.au.
- The cost of in-hospital services in Australia has risen by 22% over the last five years, but Medicare coverage has only increased by 18%, and private health fund contributions by just 12%.
- This means gap payments are rising three times faster than hospital costs in Australia — forcing patients to pay more from their own pockets.
- The average gap for known costs (disclosed to patients upfront) has risen from $99 to $135 in five years, while unknown costs (not disclosed beforehand) have jumped from $418 to $685.
However, it’s worth noting that the bulk of services covered by health insurance have no gap payment or a relatively small known gap payment. Gap payments can become problematic for policyholders for services where the provider has no gap agreement with the health fund.
Out of pocket costs by state/territory
| Proportion of services with no medical gap | Average gap payment (all services) | Average gap payment where gap was paid | |
|---|---|---|---|
NSW | 89.2% | $36.21 | $334.30 |
Vic | 86.8% | $28.50 | $216.50 |
Qld | 85.8% | $38.16 | $268.02 |
SA | 86.5% | $22.28 | $165.52 |
WA | 88.4% | $28.78 | $248.33 |
Tas | 88.3% | $28.99 | $247.79 |
ACT | 75.1% | $97.71 | $391.99 |
NT | 78.4% | $62.49 | $288.57 |
Australia-wide | 87.4% | $33.53 | $266.50 |
Nathan Kettlewell of University of Technology Sydney, explained how gap payments can be problematic when consumers are weighing up whether health insurance will be worth it for them.
“If you're a consumer and you go to a private hospital and you've got insurance that you're spending a lot of money on and then you still get a bill at the end of that hospital admission, no doubt that’s frustrating," he said.
“People are paying for insurance and then they're paying twice. So they're paying for the privilege of paying.
“It would make you reconsider whether you really ought to have private health insurance. Especially considering that if you have your surgery in a public hospital, you won't get any bill at all.”
Market share of health insurance providers in Australia
Lack of competition in the market is another concern for consumers, with the top five providers accounting for almost 82% of the market. Most of these large insurers have multiple sub-brands they sell their policies through.
Graeme Hughes of Griffith Business School explained that health insurance is not a product type that lends itself well to thriving competition among providers.
“While multiple private health insurers exist, the heavily regulated nature of the industry, particularly for Hospital policies, limits genuine competition and consumer choice,” he said.
“To foster innovation and encourage new entrants, further regulatory reform is needed. This could involve streamlining approval processes, allowing for more flexible product design, and providing targeted incentives, such as subsidies or reinsurance support.”
Health insurance complaint statistics
The number of complaints received by the Commonwealth Ombudsman relating to private health insurance rose to 3,429 in the most recent year for which data is available (FY 2022/23). But according to the Ombudsman, this increase was partly down to a single event (a data breach at insurer Medibank).
To put the number of complaints into perspective, that’s around 0.0002 complaints per person covered by private health insurance.
Prior to 2022/23, complaint numbers had been steadily decreasing since 2016-17.
