Catholic Health Australia is calling on the Albanese Government to use tomorrow’s budget to legislate a minimum 90 per cent benefit-payout ratio for private health insurers, warning that voluntary action has comprehensively failed and patients are paying the price.
The latest data shows that just 85.6 cents of every premium dollar now reaches patient care, down from 91.9 cents before the pandemic.
Had the payout ratio been held at its pre-pandemic 90 per cent, an additional $3.4 billion would have flowed to patient care over the past three years. Instead, that $3.4 billion has been retained by insurers, who posted $2.7 billion in pre-tax profits in the financial year 2024-25 alone.
In the past six years, about 90 private hospital services have closed, including maternity wards, surgical units and mental health facilities that communities depended on.
CHA director of health policy Katharine Bassett said the case for legislation was now overwhelming.
“Patients are paying more than ever for private health insurance and getting less back. We are seeing a transfer of wealth from sick Australians to insurer balance sheets,” Dr Bassett said.
“The Health Minister gave insurers a year to fix this voluntarily and they have fallen well short. The payout ratio still sits at 85.6 per cent, and the government’s own projections only have it crawling to 87 per cent by April 2026.
“Every cent insurers keep is a cent that doesn’t reach a nurse, a surgeon or a hospital bed. Meanwhile, insurer profits have hit record highs, management costs have ballooned, and the hospitals that care for patients are going backwards.
“The latest data shows that the private hospital sector as a whole is operating at a $34 million loss. That is totally unacceptable.”
Dr Bassett said the policy was modest, achievable, and in patients’ interests.
“A 90 per cent ratio is what Australians were already getting before COVID. It would put $1.2 billion back into patient care every year, and increase the value proposition of private health insurance, which is critical for taking the pressure off our public hospitals.”
CHA is also calling for a Mandatory Code of Conduct, backed by ACCC oversight and independent arbitration, to stop insurers clawing back losses through aggressive contracting.
FULL STORY
Legislate higher insurer payouts to return $1.2bn a year to patients and hospitals (CHA)
