Almost half of Australians with private health insurance intend to change or drop their cover ahead of the 4.41% average premium rise on April 1, according to new research from Money.com.au.
The nationally representative survey found 46% of policyholders plan to respond to the increase by cancelling, downgrading, switching funds, or adjusting policy settings. Nineteen percent of respondents said they plan to cancel their extras cover, hospital cover, or both. Another 18% intend to switch to a different health fund during 2026. In addition, 13% expect to increase their policy excess, while 12% are considering a downgrade in product tier, such as moving from Gold to Silver. Respondents could select more than one course of action. Despite these intentions, 54% of those surveyed said they plan to remain on their current health insurance policy when the premium changes take effect.
The Money.com.au findings indicate that younger policyholders are more likely than older cohorts to say they will cancel or move their cover. Among Generation Z respondents, 30% reported they plan to cancel their health insurance, compared with 29% of Millennials. In contrast, 11% of Generation X and 8% of Baby Boomers said they intend to cancel. Switching behaviour also differs by age group. The survey found 23% of Gen Z policyholders and 18% of Millennials plan to move to another fund this year, compared with 20% of Gen X and 15% of Baby Boomers. The data suggest higher lapse and switching activity in younger age bands, as well as possible shifts in demand toward higher excesses and lower tiers of cover.
The 4.41% average increase, the highest since 2017, will translate into different dollar changes depending on product type and benefit level. For families on a combined hospital and extras policy, the rise is estimated to add about $216 a year, based on an average annual premium of $4,908. Single policyholders on a combined product are expected to pay roughly $144 more per year, from an average of $3,264. For hospital-only products, a Gold hospital family policy is projected to increase by about $342 a year, from $7,752 to $8,094. A Gold hospital single policy is expected to rise by around $143 annually, from $3,240 to $3,383. Silver hospital family cover is estimated to lift by about $140 a year (from $3,180 to $3,320), while Silver hospital single cover is expected to rise by about $99 (from $2,244 to $2,343).
Money.com.au’s general manager of health insurance, Chris Whitelaw, said the premium changes are prompting households to review how their policies are structured. “People are looking at ways to cut costs on their health cover because this premium increase could be the straw that breaks the camel’s back. Some of the largest health funds are implementing increases above the 4.41% industry average, meaning many households will be hit with rises well above what they might expect,” Whitelaw said.
Whitelaw highlighted options such as raising the excess or paying premiums ahead of April 1 to manage near‑term cost impacts. “Increasing your excess is one of the easiest ways to reduce your premium. Another option is to pay your policy annually before April 1, which can delay the premium increase for another year. Some funds are also offering the option to lock in your current premium for up to 24 months. Not everyone can do this, but it’s worth considering,” he said.
Whitelaw also noted the coverage implications of downgrading and the risks of stepping out of hospital cover. “If you’re downgrading your cover, make sure you understand there’s a trade-off. People often get caught out when they move from Gold to Silver policies and realise they’re no longer covered for common treatments like cataracts or joint replacements. The real danger is that people cancel their cover – particularly hospital insurance – and are left uninsured for major medical expenses, while also facing longer wait times in the public hospital system,” he said.
The survey results sit alongside a period of higher premium income and stable capital ratios for private health insurers, based on Australian Prudential Regulation Authority (APRA) statistics for the quarter ended Dec. 31, 2025. Industry insurance revenue for the quarter was $8.6 billion, compared with $8.2 billion in both the December 2024 and June 2025 quarters. Insurance service expenses totalled $8.1 billion, producing an insurance service result of $468 million, up from $381 million in September and $297 million in June.
Profit from continuing operations after income tax was $417 million for the December 2025 quarter, down from $493 million in September but above the $431 million reported in March. The investment result was $164 million, compared with $297 million in the previous quarter. At year-end 2025, total assets held by private health insurers stood at $20.3 billion, with total liabilities of $7.2 billion and net assets of $13.1 billion. The sector’s capital base was $12 billion, and the prescribed capital amount coverage ratio was 2.51, broadly consistent with recent quarters.
Industry body Private Healthcare Australia (PHA) has linked the 4.41% average premium rise for 2026 to higher claims costs and increased use of hospital services. PHA chief executive Dr Rachel David said health funds are working to balance premium affordability with the cost of caring for an ageing population and managing more complex chronic conditions. She noted the 4.41% adjustment is below the 5% increase in the cost of providing medical and hospital services recorded in the last financial year. “More people are using their health insurance for high-cost hospital care such as joint replacements and cancer treatment, and the cost of delivering care continues to rise. This premium increase reflects those realities. If health funds could keep premiums the same without jeopardising their ability to pay claims, they would. The industry is acutely aware of how tough many Australians are doing it right now,” David said.
According to David, funds are expanding no‑gap and known‑gap arrangements and introducing more treatment‑at‑home models, including drug and alcohol rehabilitation, chemotherapy, and post‑surgical care delivered in the home. She said insurers are also increasing investment in health management and prevention programs aimed at people with chronic disease. She added that the premium change would also support private hospitals that PHA describes as facing higher operating costs and lower occupancy levels following the pandemic. PHA figures indicate that more than 15 million Australians hold private health insurance, including about 12.6 million with hospital cover. The industry body reports that consumers receive an average of 85 cents in benefits for every dollar of premium paid.
