Gold-tier hospital cover has become especially hard to price sustainably because it must include costly mental health and maternity services and premiums keep rising for younger members. Industry body Private Healthcare Australia argues that if funds cannot offer affordable access to those services, people under 50 have little incentive to stay insured.
That dynamic is now driving a clear shift away from top-tier policies and reshaping the private health market.
For the first time in many years, there are now fewer Australians holding gold hospital cover than mid-tier silver policies, according to data cited at the Financial Review Insurance Summit. Private Healthcare Australia links this turning point to rigid gold, silver and bronze basic tier rules, which lock expensive benefits into the top level and limit product flexibility for funds.
Pressure intensified after the latest federal budget stripped a significant portion of the private health insurance rebate for over-65s and made premiums even less affordable for many older members.
Government modelling suggested about 44,000 people would abandon private health insurance after the rebate change, but Private Healthcare Australia expects an even sharper response. The group forecasts roughly 53,000 people will drop their cover entirely and another 200,000 will downgrade to cheaper, lower-benefit policies.
Many of those moving out of comprehensive cover are expected to rely more heavily on the public system and add to already long public hospital waiting lists and concerns about access to timely care.
