Rising private health insurance premiums are reflecting deeper cost pressures within Australia’s healthcare system, Aon said, with new data indicating that employer-sponsored medical plans are also facing sustained increases.
The firm said the recent premium adjustments should be understood against a backdrop of broader healthcare inflation, rather than as a standalone pricing move.
“While premium changes reflect a range of factors, they also point to ongoing increases in the underlying cost of healthcare. Aon’s 2026 Global Medical Trend Rates Report highlights healthcare costs in Australia continuing to climb, with employer-sponsored medical plans forecast to increase by around 5.2% this year,” Aon noted in its report.
"For employers, this reinforces the importance of understanding what’s driving claims in their health plans and investing in prevention, wellbeing, and data-led strategies that can help deliver more sustainable healthcare outcomes over time.”
The comments come as private health insurance premiums are set to rise by an average of 4.41% from April, the largest increase in almost a decade following federal government approval.
Aon’s report suggests that cost growth is extending beyond retail insurance into corporate health benefits, with employer-sponsored plans forecast to rise by 5.2%, reflecting continued escalation in claims costs such as hospital and specialist services. The firm said employers are being urged to analyse claims drivers within their workforce and prioritise preventative and data-led benefits management to improve long-term sustainability rather than relying solely on annual premium increases.
The broader premium rise has also intensified debate about affordability across the private health system. National Seniors Australia has reiterated its call for an independent review, citing concerns over rising premiums and out-of-pocket costs.
Research from the Grattan Institute found one in five patients was charged “extreme fees” by specialists, defined as three or more times the Medicare schedule fee. Health Department officials told Senate estimates that average out-of-pocket costs for a specialist consultation have risen to $123, up from $49.56 in 2010 to 2011.
Health Minister Mark Butler has said the government is examining policy options, including the legal boundaries of regulating specialist fees, but any move could face constitutional challenge. An AMA spokesman said: “So, rather than constraining the private sector, let’s invest in the public sector so that Australians genuinely get a choice.”
However, Aon’s report frames the issue in structural terms, pointing to persistent healthcare inflation as a continuing factor for insurers and employers managing medical cover, beyond individual premium decisions.
