AMA urges private health overhaul and independent authority ahead of Tuesday’s budget

The Australian Medical Association has urged sweeping reforms to Australia’s private health system ahead of Tuesday’s federal budget, proposing a new independent authority to oversee the sector and measures to ensure consumers receive better value for their premiums.

Federal AMA President Dr Danielle McMullen said a strong private hospital sector reduces pressure on the public system and offers patients greater choice and control, while fostering innovation. But she said major problems have emerged in recent years, with some private hospitals facing financial distress and even closure, and patients confronted by rising premiums alongside reduced coverage.

According to Dr McMullen, 68 per cent of hospital policies now contain exclusions, and the share of premiums paid out by insurers for patients’ treatment has declined, standing at 84 per cent in 2024–25. In its 2026–27 pre-budget submission, the AMA is calling for the introduction of a minimum pay-out ratio of 90 per cent to deliver a fairer deal for patients and private hospitals and to encourage greater uptake of private insurance.

The association also wants funding for hospital-in-the-home services through a minimum payable benefit in the private sector, underpinned by legislation to enshrine patient safety, protect patient choice and maintain clinical autonomy.

Dr McMullen said clear rules are needed to provide uniform access to innovative models of care such as home rehabilitation and hospital-in-the-home, and cautioned that some insurer-run models are funneling patients to the insurer’s own services, ultimately restricting choice and access.

The AMA is also calling for a rethink of how the system is managed, including the establishment of an independent private health system authority to close regulatory gaps. An independent body, Dr McMullen said, would have the objectivity and expertise to oversee reform while balancing the interests of patients, hospitals, insurers and doctors.

It would bring stakeholders together to enact reforms, knit together regulatory functions currently spread across disparate departments and agencies, and, she said, remove government from its conflicted role of regulator and policy maker.

The proposals are set out in the AMA’s 2026–27 pre-budget submission as the association seeks changes it says are necessary to safeguard the viability of private healthcare and improve value for consumers.