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Australians' out-of-pocket medical expenses rise to $1b in 2024

Private health insurance benefits in Australia have hit a record low since 2008.

Australia’s private health funds now cover just 66.7% of the total cost of hospital and general medical services after Medicare contributions, down from 75.7% five years ago and 70.7% in 2008.

Private health insurance benefits in Australia have hit a record low since the Australian Prudential Regulation Authority (APRA) began annual reports on the industry in 2008, according to data analysed by Money.com.au.

In 2024, medical costs totaled A$7.7b ($4.85b), with A$4.1b ($2.58b) remaining for patients and insurers after Medicare contributions.

Private health funds covered only A$2.75b ($1.73b) of that amount, leaving Australians to pay A$1.37b ($0.86b) out of pocket—an increase from A$779m ($490.77m) five years ago and A$523m ($329.49m) in 2008.

Money.com.au’s general manager of Health Insurance, Chris Whitelaw, warned that the gap between expected and actual insurance coverage is widening.

He noted that whilst private health funds used to cover three-quarters of the bill after Medicare, they now cover closer to two-thirds.

Whitelaw added that rising medical costs and shrinking health insurance coverage are putting financial pressure on patients, whilst premiums continue to increase each year.

Medical costs rose by 9% in 2024, whilst Medicare coverage grew by 8.1% and private health benefits by 7.1%, leading to a 15.4% rise in out-of-pocket expenses—the highest on record.

Despite the increased financial burden, the share of Australians with private health cover marginally increased from 44% to 45.2% in the past five years. The report said that higher costs are not due to a decrease in the insured population.

Meanwhile, private health premiums have been rising faster than benefits.

Over the past five years, premiums increased by 15.1%, whilst health fund contributions to hospital and general treatment services grew by only 13%.

Premiums are set to rise again on April 1, 2025, by an average of 3.73%, meaning Australians could pay an additional A$3.73 ($2.35) or more for every A$100 in premiums they currently pay.

($1.00 = A$1.59)
 

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