Premiums are rising far faster than official increases, coverage is narrowing and hospitals are under strain – Australia’s private health model is failing.

You pay more, coverage delivers less, and policies are so opaque you can’t tell what’s even covered. Meanwhile: insurers posted $1.7 billion in profits while 82 hospitals closed. Here’s what’s really going on.

The data

Last month’s 4.41 per cent ‘average’ increases in Private Health Insurance (PHI) doesn’t match what many people actually pay. How? Insurers close your existing policy and open a nearly identical one at a much higher price – bypassing the approval process.

The result: Gold premiums up 45 per cent over four years while approved increases totalled just 11.9 per cent. Insurers posted $1.7 billion in profits. And one-in-seven Australians say they’re walking away.

The coverage confusion

You have Private Health Insurance. Here’s what they don’t tell you:

Premiums vanish: Every dollar expires December 31. No accumulation. No ownership. Just gone. Twenty years of premiums? That’s $60,000+ gone forever with nothing to show for it.

Network trap: Use insurer-preferred providers for lower gaps, OR choose a specialist you actually know and trust and face thousands in gap payments.

Tier exclusions: Bronze/Silver policies exclude what you’ll eventually need – joint replacements, cataracts, heart treatments.

The catch-22: Buy cheap Bronze/Silver to avoid tax penalties when healthy, then face massive costs or waiting periods when you need major surgery.

Complexity by design: Policies so complex you discover what’s NOT covered only when you claim.

False choice: Go with their network or pay thousands more out-of-pocket.

You’re paying for ‘choice’ but penalised financially if you actually exercise it.

The model

Traditional insurance covers unpredictable risks. Private health insurance covers predictable procedures – hip replacements, cataract surgery – events you can often plan for.

Taxpayers contribute $6.9 billion annually in subsidies. Hospitals receive over $1 billion less than needed from insurers. Private maternity care is predicted extinct by decade’s end. The infrastructure is under severe strain.

The policy question

Australia faces a fundamental choice: continue subsidising a failing insurance model, or look at how other nations have solved this problem.

Our current approach assumes private healthcare must be funded through insurance intermediaries. But insurance theory – designed for unpredictable catastrophes – breaks down when applied to predictable, planned procedures. We’re forcing square pegs into round holes, then wondering why the system doesn’t work.

The question isn’t whether the current model is sustainable. The data answers that: it isn’t. The question is whether we have the political will to examine alternatives that other countries have successfully implemented for decades.

The alternative

Singapore uses personal healthcare savings instead of insurance subsidies. Result: 84.9-year life expectancy at 4.5 per cent of GDP. Australia spends 10.7 per cent.

Australia manages $3.5 trillion in superannuation successfully. Similar infrastructure exists for healthcare savings – it’s a policy choice, not a capability question.

The choice is clear: premiums that vanish versus savings that grow. Subsidies versus ownership. A proven 40-year track record versus a system in collapse.

The emperor as no clothes

Premiums up 132 per cent above inflation. Your dollars vanish every 31 December. Hospitals are closing while insurers pocket $1.7 billion in profits.

Singapore spends half what we do with better outcomes using personal healthcare savings. The infrastructure exists here. The precedent exists internationally. What’s missing isn’t capability – it’s conversation.

One-in-seven Australians are already walking away from private health insurance. The system isn’t failing. It has failed. The only question is what comes next.