A substantial majority of Australians with private health insurance are in favour of reforming private hospital funding, according to a recent survey conducted by Money.com.au. Around 80% of policyholders indicated support for changes that could reduce out-of-pocket expenses, signalling strong public appetite for reform in the sector.
Only one in five respondents—20%—prefer the current funding arrangement, which combines insurer contracts, patient contributions, and Medicare benefits. This demonstrates a clear push among consumers for a system that is more predictable and less financially burdensome.
Support by Funding Model
The survey reveals divergent preferences regarding the form these reforms should take:
| Funding Model | Support Among Respondents |
|---|---|
| Any model that reduces out-of-pocket costs | 53% |
| Federal Government’s proposed Activity-Based Funding (ABF) model | 27% |
| Maintain current insurer-Medicare-patient fee mix | 20% |
The proposed Activity-Based Funding model would establish a standard payment for private hospitals based on the type and volume of care delivered, replacing the current variable fee structure.
Generational Differences in Opinion
The survey highlights marked generational differences in support for reform:
-
Baby Boomers are the strongest advocates for reform in principle, with 64% favouring any approach that reduces gap fees.
-
Generation X is the most supportive of the Federal Government’s specific ABF proposal, with 27% backing the plan.
-
Younger Australians are more likely to favour the status quo, with 46% of Gen Z and 34% of Millennials preferring current arrangements.
Government Proposal and Industry Concerns
The Federal Government’s draft reforms include the introduction of a Private National Efficient Price (PNEP), a national benchmark designed to guide pricing and contract negotiations between insurers and private hospitals. While the framework remains in consultation, any finalised reforms are anticipated to take effect from July 2026.
Industry experts caution that reform must balance patient affordability with commercial viability. Chris Whitelaw, General Manager of Health Insurance at Money.com.au, warned that without robust safeguards, private hospitals might raise gap fees to offset costs under an activity-based model.
The discussion on reform is further intensified as health insurance premiums face upward pressure, with industry projections estimating an average rise of nearly 4% this year due to ongoing health inflation.
These findings suggest a clear public desire for change, though successful implementation will require careful alignment between patient protection and the financial realities of private hospital operations.