Private Health Insurance Price Hikes: Why Your New Plan Costs More Than Expected
Published June 12, 2026
The cost of premiums is increasing due to loopholes in the private health care sector, and the cost of hospital insurance is rising. November is when private health insurance providers need to lodge their plans for premium rate increases in 2026, but not all companies follow regulations.
For instance, funds seeking to make adjustments in premium rates should obtain approval from the Department of Health and Aged Care and APRA; decisions on premiums will be made by late January, and changes will take effect from 1 April. Premiums increased by an average of 3.73% in 2025, while premiums might increase by a much larger percentage in 2026 because of the escalating costs associated with hospitals, wage increments, and increased inflation.
However, there are some funds that try to escape this system and find ways to get people to pay more. An example is phoenixing, where funds can cancel existing products and open others with almost similar benefits but at much higher costs.
Phoenixing in the limelight
Phoenixing has driven up the cost of top-tier private health insurance policies, far exceeding government-approved average increases. Private health insurers have been using the phoenixing loophole in order to avoid going through the approved process for raising prices annually, but it recently hit the headlines after CHOICE, a consumer advocacy organisation published a report highlighting the tactic.
February 2024 – CHOICE alerts about phoenixing
CHOICE released a report showing how insurers had exploited the loophole by using phoenixing to hike premiums in gold-level health insurance plans.
December 2024 – Commonwealth Ombudsman’s report
Commonwealth Ombudsman released their report that found the practice of phoenixing had made regulation ineffective and unable to prevent price gouging on behalf of consumers.
March 2025 – Call for investigation into premium increases
Minister for Health, Mark Butler, demanded an urgent investigation into premium increases that took advantage of regulatory loopholes after criticising insurers for their “price-gouging.”
September 2025 – Government’s proposed reform
Following this, the government initiated a reform in an attempt to ban the practice of phoenixing.
What will happen next?
Although it is unknown when the new laws will come into force, the changes are expected to be made before the 2026 premium round that begins on 1 April 2026. Insurers would have to receive ministerial approval for each health insurance product created in accordance with the new legislation, just as it happens now for premium hikes.
According to the Department of Health, the insurers are expected to prepare for these changes, and meanwhile, they are encouraged to stop abusing the loophole.
What it means for the policyholders
Phoenixing makes Australians pay more money for insurance than necessary, and this mainly concerns people who have recently bought a new or better health insurance plan. The high prices not only make the coverage expensive but also prevent insurers from competing with each other.
To avoid expensive premiums, customers stick to old policies and thus lose the opportunity to change them.
Some may even reduce their coverage in order to avoid paying extra money but at the cost of becoming underinsured.
Whether through phoenixing or regular premium increases, rising costs are a good reminder to shop around. Comparing policies can help you find cover better suited to your needs and budget and switching could save you hundreds each year.
| Hospital Cover Level | Approx. Cost (Fortnightly) | Estimated Cost Per Year |
|---|---|---|
| Basic | $40 – $45 | $1,020 – $1,060 |
| Bronze | $46 – $57 | $1,170 – $1,465 |
| Silver | $60 – $99 | $1,550 – $2,450 |
| Gold | $178 – $194 | $4,600 – $5,000 |
Indicative pricing based on late-2025 market estimates.
Example scenario: Single adult aged 35, base income category, Sydney postcode 2000, with a $500 excess selected.
Higher-tier options may include additional benefits beyond hospital cover.
Figures are rounded and intended as a general pricing guide only.
Guides for selecting the right health insurance package
Consider other options available among health insurance funds
Apart from considering what your current insurance fund can give, consider other options that can deliver the same coverage while saving money.
Avoid over-insurance
Always check the insurance cover you have and remove services you do not utilize to avoid overpaying. For instance, if your children are all born, there is no need to continue with the coverage for pregnancy.
Do not fall into the trap of under-insurance
Although reducing the premium is attractive, you should never go for an insurance cover that cannot cover your needs even if it saves you money.
Consider other levels of cover
Not all times will gold or platinum coverage be necessary for your needs. Consider silver or silver plus packages which cover all your needs.
As Private Health Insurance Price Hikes continue to impact Australians, compare your options carefully and find cover that suits your needs and budget with Utility Market. Follow us on Instagram for the latest insurance updates, savings tips, and market insights.
