Insurer’s ‘failing’ health system warning as costs soar
Australians continue to switch private health insurance coverage due to rising costs of living ahead of one of the biggest government-approved premium increases in almost 10 years.
At the same time, the country’s healthcare system is under pressure and continues to fail in some areas, according to the head of the country’s largest health insurer.
Medibank Private reported on Thursday that its net profit in the first half of 2025/26 fell 11 per cent to $302.9 million.
The underlying result was $297.8 million, down slightly after some non-health-related costs and impacts offset growth in the core business.
Medibank’s main bright spot was a 38,300 increase in established policyholders; This number is almost double the increase in the previous first half, reaching nearly two million in total.
“We recognize that many customers are making this difficult, including the recent rate hike and recently announced premium increases,” Chief Executive David Koczkar told analysts on an earnings call.
“However, despite this challenging environment, the established health insurance market remains vibrant, including continued strong growth of younger customers choosing private insurance.
“We expect established growth rates to remain well above pre-pandemic levels.”
Medibank recently announced that health premiums will increase by an average of 5.1 percent compared to April.
This comes after the federal government gave the green light to an average industry-wide premium increase of 4.41 percent for this year.
This increase was the largest single-year increase in premiums since 2017.
Medibank said the premium change equates to an extra $2.14 per week for a single policy and $4.46 per week for families.
Take-up of non-residential policies, held mostly by international students, rose 0.4 per cent year-on-year in the first half to almost 350,000, although the number was down slightly from the end of the last financial year.
“While we are seeing policyholder growth rates in our non-resident businesses slightly lower than they were a few years ago, our performance continues to outperform the market,” Mr. Koczkar said.
The non-resident market has adapted to the federal government’s recent immigration reforms, with the number of students abroad stabilizing and the number of foreign workers increasing.
“But we expect the market to continue growing and we are also seeing more students and workers becoming residents,” Mr. Koçzkar added.
“We remain the preferred insurer of the student market.”
Mr Koçzkar said people continued to turn to private insurance because waiting lists at public hospitals were high, especially for elective surgeries.
Consumers were also switching brands and products in search of better value and opting for lower levels of cover as living costs rose.
Mr Koçzkar added that more generally, all was not well in the Australian hospital and healthcare system, despite high government funding.
“Australia has never spent this much on healthcare, and yet in some areas the system is failing,” he said.
“Pocket costs are rising, patients are waiting longer for care, clinicians are under pressure and preventable hospitalizations are nearly 30 per cent above the OECD average.”
Despite the problems, the pace of hospital reform remains too slow, he said.
Medibank will pay an interim dividend of 8.3 cents per share, up 6.4 percent.
Its shares fell 5.8 percent to $4.51 in morning trading.
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