Australians are facing a significant rise in out-of-pocket medical expenses, with private health insurance coverage reaching its lowest point in over 15 years.
Data from Money.com.au shows that in 2024, private health insurance now covers just 66.7% of the total cost for hospital and general medical services after Medicare contributions. This marks a sharp decline from 75.7% five years ago and 70.7% in 2008. The Australian Prudential Regulation Authority (APRA) began tracking private health insurance benefits in 2008, and the latest figures reveal the lowest coverage on record.
In 2024, total medical costs in Australia amounted to A$7.7 billion (US$4.85 billion), with A$4.1 billion (US$2.58 billion) remaining after Medicare contributions. Private health funds covered A$2.75 billion (US$1.73 billion) of this total, leaving Australians to pay A$1.37 billion (US$0.86 billion) out of pocket. This is a significant increase from A$779 million (US$490.77 million) in 2019 and A$523 million (US$329.49 million) in 2008.
Chris Whitelaw, General Manager of Health Insurance at Money.com.au, highlighted the growing gap between the coverage expected by Australians and what private health funds are providing. He pointed out that while private health funds once covered three-quarters of medical bills after Medicare, that figure has now dropped to two-thirds. The rising medical costs, coupled with shrinking insurance coverage, are putting added financial pressure on patients, particularly as premiums continue to rise each year.
In 2024, medical costs increased by 9%, while Medicare coverage grew by 8.1% and private health insurance benefits rose by just 7.1%. This disparity has resulted in a 15.4% surge in out-of-pocket expenses—the highest increase on record.
Despite this financial strain, the proportion of Australians with private health insurance has slightly increased from 44% to 45.2% over the past five years. The report indicates that the higher costs are not a result of fewer people holding private health insurance.
However, premiums continue to outpace the growth in benefits. Over the past five years, premiums have risen by 15.1%, while health fund contributions to hospital and general treatment services have increased by just 13%. Premiums are set to rise again on April 1, 2025, by an average of 3.73%. This means Australians could pay an additional A$3.73 (US$2.35) for every A$100 in premiums they currently pay.
The ongoing rise in out-of-pocket expenses, combined with escalating premiums and reduced coverage, underscores the growing financial burden facing Australians in the healthcare sector.
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