AMA warns funding strains could deepen insurance pressures as hospitals buckle

Australia’s peak medical body has warned that mounting strain across the health system could spill into insurance costs and workplace health schemes unless governments overhaul how care is funded and delivered.

In its 2026–27 pre-budget submission, the Australian Medical Association (AMA) called for a broad reset of Medicare settings and hospital funding, arguing that pressures in general practice, public hospitals and private healthcare are compounding and undermining patient outcomes.

At the heart of the AMA’s case is the view that Medicare’s rebate structure no longer reflects how care is delivered, as more patients present with chronic and complex conditions that require longer consultations and coordinated treatment. AMA president Danielle McMullen said the current rebates remain geared toward short appointments despite changing patient needs.

“General practice is the foundation of our system and helps keep people well and out of hospital, but it is being asked to do more with a funding model that doesn’t reflect the reality of patient care,” she said. The AMA cautioned that these strains have implications beyond hospitals and GP clinics.

Private health insurers have faced sustained claims inflation driven by rising utilisation, medical cost escalation and higher chronic disease prevalence. Public system bottlenecks can also create knock-on effects for workers’ compensation, income protection and group health schemes, as delayed treatment extends recovery times and the duration of claims.

Public hospitals remain under severe pressure, the AMA said, citing overcrowded emergency departments, long surgery waitlists and workforce burnout that is constraining capacity. It warned that the private sector faces structural affordability challenges as policyholders pay more while perceiving less value, a trend that has weighed on retention as claims ratios rise.

According to the Australian Prudential Regulation Authority, benefits paid by private health insurers rose faster than premium revenue in 2025, adding to underwriting margin pressure across the sector. The association also elevated prevention and chronic disease management as long-term priorities, noting that overweight and obesity have overtaken smoking as Australia’s leading modifiable health risk factor.

That shift is increasingly relevant for life, health and disability insurers, as chronic disease prevalence influences morbidity assumptions, claims frequency and long-term healthcare utilisation.

The AMA’s recommendations include restructuring Medicare rebates to better support longer GP consultations, expanding multidisciplinary care through general practice, improving after-hours access, increasing hospital funding and introducing stronger oversight measures for private health.

It also called for additional preventative measures, including a tax on sugar-sweetened beverages. For insurers, the warning adds to wider industry concern that healthcare inefficiencies are becoming a more material cost driver across multiple product lines, particularly as ageing demographics and chronic disease trends place additional strain on Australia’s medical infrastructure.