Why health insurancepremiums go up

As a not-for-profit health insurer, our focus is on delivering value to members rather than shareholder profits, and we do everything we can to keep the cost of your cover as low as possible.

The increasing cost of health care means that we and other health insurers need to review our premiums each year. We’re proud of the fact that in 2018, our average increase was the lowest of the major health funds, and our lowest average increase in 16 years.

That said, we know rising costs aren’t what you want to hear, so we want to be open about why it happens and what we’re doing to help make health care as affordable as possible for our members.


Advances in health care have led to an improvement in medical treatment, but this means that the services you can access through your cover may cost more.

The reality is that health services are getting more expensive. More money is being spent on health across the sector with total health expenditure in Australia increasing by 59% in the last decade.

We’re also now paying out over 60% more (on average) per policy compared to 10 years ago.


Our world-class health care system is one of the reasons Australians are now living longer, but our longer lifespans are creating greater demand for medical treatment.

Last financial year, 3 of the most common hospital treatments we covered were:

  • knee replacement – over 95% for members aged 55+
  • hip replacement – over 98% for members aged 44+
  • cataract surgery – over 92% for members aged 59+.

We also support our younger members – we paid over $135 million in hospital benefits to under 30s last financial year.

It all adds up to more people using health services. In the last 5 years the number of HCF members admitted to hospital has risen by 18%.


The Australian Government Rebate on private health insurance was introduced in 1999 to help make health insurance more affordable. This contribution from the government helps to cover some of the cost for eligible Australians. 

In 2012, the rebate became means tested, which means your eligibility depends on your income. If you have a higher income, your rebate may be reduced, or you may not be entitled to any rebate.

The rebate amounts are also adjusted annually on 1 April – this is commonly known as 'rebate indexation'. It's based on the consumer price index (CPI) and the industry average premium increase.

Since the introduction of rebate indexation in 2014, the most common rebate has decreased from 30% on 1 April 2013 down to 25.4% from 1 April 2018, meaning our members may have to pay a higher share of their premiums.

For more information, visit the Department of Health or privatehealth.gov.au.


As a not-for-profit health insurer, we’re focused on keeping health care as affordable as possible for our members. We pass on savings wherever we can, look for ways to reduce the cost of treatment and help our members get the best value from their cover. In the last 5 years, we’ve delivered a higher percentage of premiums back in benefits than the average fund.

We have agreements in place with 450 of the 600 private hospitals in Australia (known as participating hospitals) to ensure our members won’t face out-of-pocket expenses for services covered under their policies.

And last year, over 95% of specialist inpatient services were covered by our Medicover scheme – where members pay their specialist doctor(s) either no-gap or known-gap (an out-of-pocket amount capped at $500).

We’ve also passed on 100% of our $20.5 million savings from the recent prosthesis reforms, to ensure the lowest rate increase possible.

And by operating as efficiently as possible we also spend less running HCF (as a percentage of revenue) than the average fund.*

* Our 2016-17 operating expense ratio was 8.5% compared to the industry average of 8.9%.


We look at the bigger picture and leverage our resources, networks and influence to innovate and help make health care more affordable for all Australians. Here are some of the ways we do this:

  • HCF Research Foundation: Investing in the improvement of health services.
  • Driving reform: Working directly with the government to influence reform to lower healthcare costs.
  • HCF Catalyst: Supporting health-tech startup businesses to drive innovation with the aim of creating more effective and efficient healthcare.
  • Partnerships: Working with likeminded organisations using innovation and technology to benefit our members. One example is Healthshare, whose online tool enables HCF members to find no-gap or known-gap doctors in their area.


We’ve been recognised by independent review body Canstar, for providing outstanding value in health insurance for the second year in a row.

Find out more

Frequently asked questions

Read FAQs on your premium changes.

Understanding the costs

How to get the most out of your private health insurance.


What you need to know about the private system.


Programs and services that empower you to live a healthier life.