Private health cash flood: Aussies swipe right on private healthcare to ditch queues

As public hospital waitlists grow, private health insurers are funding private hospitals at record high levels - but how long can this last?

It's getting harder and harder to stay in a committed relationship with the public health system for many Aussies, according to new research from the Australian Prudential Regulation Authority (APRA).

Payments by private health insurers to private hospitals have shot up by 8% over the past year.

At 117% of pre-pandemic levels, these figures show patients are increasingly willing to explore treatment outside of a public health system overloaded with growing waitlists.

And while it's easy to say "all you need is love". It seems Aussies are looking for a healthcare partner that's present and accessible.

It's not you, it's me

A rising number of Aussies have started a relationship with private health over the last few years, with Medicare services becoming more difficult to access.

Nearly 14.9 million Australians are covered by some form of health insurance in 2024, up from 14.7 million in 2023 and 13.6 million in 2019.

With waitlists growing at public hospitals and more GPs moving away from bulk billing, Aussies are turning to private options to get the healthcare they need, says Dr Rachel David, CEO of Private Healthcare Australia.

"This data confirms many Australians are prioritising their health and access to private health services during tough economic conditions."

Aussies have become more conscious about their health since Covid. And the proof is the pudding.

In the year leading up to June 2024, spending on extras by health funds went up by 5.2%, while hospital treatments saw a 7.9% rise.

"Two thirds of planned surgery is now funded by private health insurance, which is critical at a time when public hospitals are under pressure and waiting lists have blown out around the country."

But it's hard to blame the old flame Medicare, given its lack of consistent government support, says Tim Bennett, Insurance Expert at Finder.

Since Covid we've seen a good deal of Aussies looking for hospital and extras treatment outside the public system, mostly due to wait times for elective surgeries.

"The fact is, government funding for Medicare has not kept up with increased demand."

It's hard to be fully there for everyone when you're struggling to take care of yourself.

Could trouble be brewing in paradise?

While private health remains the shiny new toy for millions of Australians, experts are wondering how sustainable things are.

Inflation has hit the medical industry as well, driving up insurance costs particularly due to record-high payments ($2.4 billion) for generic medical devices last year, according to Dr David.

"There's been an 18.8% increase in the volume of medical implants and surgical supplies claimed from health funds since 2019. This is totally out of proportion with a 4.7% increase in the number of medical services funded by health funds over the five years to June 2024."

Over the past four years, many Aussies have been paying for private health insurance despite being unable to use it for elective surgeries and extras due to restrictions related to Covid-19.

In that time, health funds have built up a nice cash reserve.

This extra change has let providers keep premium hikes relatively reasonable, helping them attract more members.

Despite this, Dr David points out that for many Australians, premiums are still tough to afford.

"Despite strong growth in health insurance membership for four years, we know many Australians are struggling to pay their premiums. Some are barely holding on."

If premium increases eventually return to the historical norm, we may find again that the love of Australians is indeed conditional.

How do you know if they're the one?

If you're thinking of starting a relationship with a private health fund or reconsidering your current coverage, it's important to know what fishes are in the sea.

Finder makes it simple to compare every health policy in the market. With the mix of features and price on display, you can also decide if a private health policy truly meets your needs or if it's better going solo.