Australia’s medical profession is warning that mounting pressure across the country’s healthcare system could have growing implications for insurers, healthcare providers and workplace health schemes unless structural reforms are made to funding and service delivery.
In its 2026–27 pre-budget submission, the Australian Medical Association called for a broad rethink of how healthcare is funded and organised, arguing that strains across general practice, public hospitals and private healthcare are compounding and undermining patient outcomes.
At the centre of the AMA’s submission is concern that the current Medicare funding model no longer reflects how care is delivered, particularly as patients present with more chronic and complex conditions requiring longer consultations and more coordinated treatment pathways.
AMA president Danielle McMullen said the rebate structure remains geared toward shorter consultations 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,” McMullen said.
For insurers, the concerns point to broader cost and claims implications across both health and general insurance lines.
Private health insurers have already faced sustained claims inflation driven by rising utilisation, medical cost escalation and greater chronic disease prevalence. At the same time, public system bottlenecks can create knock-on effects for workers’ compensation, income protection and group health schemes when delayed treatment extends recovery times and claims duration.
The AMA said public hospitals remain under severe strain, with overcrowded emergency departments, lengthy surgery waitlists and workforce burnout continuing to affect system capacity. It also warned that the private health sector faces structural affordability pressures as patients pay higher premiums while receiving less perceived value.
That issue has become increasingly prominent for Australian health insurers as claims ratios rise and affordability concerns pressure policyholder retention. According to the latest data from the Australian Prudential Regulation Authority, benefits paid by private health insurers rose faster than premium revenue in 2025, contributing to underwriting margin pressure across the sector.
The AMA also highlighted prevention and chronic disease management as critical long-term concerns, noting that overweight and obesity have now overtaken smoking as Australia’s leading modifiable health risk factor.
That trend is increasingly relevant for life, health and disability insurers, as chronic disease prevalence continues to influence morbidity assumptions, claims frequency and long-term healthcare utilisation.
The association’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 private health oversight measures.
It also called for further preventative health measures, including a tax on sugar-sweetened beverages.
For insurers, the AMA’s warning adds to broader industry concern that healthcare system 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.
