The Australian Capital Territory (ACT) government is introducing measures to encourage residents to use their private health insurance when accessing public hospital services.
While the ACT leads the nation in private health insurance coverage, actual usage rates within the public system remain comparatively low.
Data from the Australian Prudential Regulation Authority (APRA) showed that 66% of ACT residents held private health insurance as of March 2024.
However, Health Minister Rachel Stephen-Smith said that previous federal funding arrangements provided limited motivation for Canberra Health Services to promote private insurance use in public hospitals, according to a report by The Canberra Times.
A new transformation initiative, funded with $13 million over three years in the 2025-26 budget, is designed to improve operational efficiency and increase revenue by encouraging both patients and clinicians to utilise private insurance in public settings.
The project is structured to ensure patients do not incur out-of-pocket expenses when using their insurance.
Rosalie Hughes, chief financial officer at Canberra Health Services, projected that billing private insurers could generate between $7 million and $10 million annually.
This approach is part of a broader strategy to address a significant health budget shortfall in 2024–25, which required a $227 million budget supplement.
Health spending now accounts for about one-third of the ACT’s 2025–26 budget.
Other cost-saving actions already implemented include more than $27 million in savings from seven separate initiatives, $15 million in savings from directly employing graduate nurses instead of agency staff, and improvements in billing processes for Medicare and the Department of Veterans’ Affairs.
Despite these measures, rising demand for hospital services, particularly in emergency departments, continues to challenge the system.
Minister Stephen-Smith acknowledged that maintaining budget discipline will remain difficult.
“Staying within budget is going to be a challenge,” she said, as reported by The Canberra Times.
APRA’s annual report for the 2023–24 financial year provides a detailed overview of the private health insurance sector’s financial and operational performance.
The industry generated $31.25 billion in insurance revenue, with Bupa HI Pty Ltd, Medibank Private Limited, and Hospitals Contribution Fund of Australia Ltd (HCF) among the largest contributors.
Total insurance service expenses reached $28.08 billion, while investment returns added $970 million.
After accounting for other adjustments, the sector reported a pre-tax profit of $2.11 billion and an after-tax profit of $1.58 billion.
Medibank and Bupa reported after-tax profits of $552 million and $412 million, respectively, while HBF Health Limited posted a loss of $18 million.
As of September 2024, 5.9 million Australians – representing 45% of the population – held hospital policies, an increase of over 105,000 policies since June.
General treatment policies, which cover services such as dental and physiotherapy, reached 14.7 million people, or 54.7% of the population.
During the September quarter, private health insurers paid $4.82 billion in hospital-related benefits.
Acute care accounted for $2.65 billion, while $660 million was paid for medical devices.
General treatment benefits totalled $1.57 billion, with dental services receiving $894.3 million.
Analysis by Canstar in June 2025 found that some Gold-tier hospital insurance premiums rose by an average of 13.8% following the government’s average increase of 3.73% in April 2025.
This equates to an additional $442 per year for individuals, while family Gold-tier policies increased by $858 to an average of $7,207.
Bronze and Silver tiers saw smaller increases, and Basic-tier premiums declined slightly.
Premiums varied by state, with Victoria and Queensland recording the highest average Gold-tier premiums, while the Northern Territory and Western Australia had the lowest.
Despite the premium hikes, a recent survey by Money.com.au found that many Australians consider health insurance – especially extras cover – to provide the best value among insurance products.
Twenty percent of respondents identified extras policies as offering the most savings, while 19% pointed to hospital insurance.
Chris Whitelaw, general manager of health insurance at Money.com.au, said the survey results indicate a shift in how policyholders evaluate the benefits of health coverage.
“Australians are placing increasing value on the day-to-day savings extras policies offer because you’re generally more likely to claim on dental, physio, optical, and other allied health services than you are on hospital treatments,” he said.
