Private health insurer vertical control is a growing threat to Australian healthcare

The increasing vertical integration of private health insurers in Australia is raising serious concerns about the future of our healthcare system. While insurers claim that controlling both the funding and provision of care leads to greater efficiency and lower costs, international evidence suggests that these models often result in reduced patient choice, higher costs, and diminished quality of care.

Private health insurers in Australia are increasingly embedding themselves within the healthcare system, shifting from their traditional role as funders to directly providing healthcare services. Medibank, through its subsidiary Amplar Health, delivers primary care, in-home services, and mental health support. Bupa operates dental clinics, aged care facilities, and general medical practices. nib has invested in digital health and dental networks. These moves create conflicts of interest, where insurers have the incentive to limit patient choice and steer them toward in-house services that align with corporate priorities rather than medical need.

The experience in other countries highlights the risks of vertical integration. In the United States, where insurers have long dominated healthcare delivery, consolidation has not led to lower costs or better care. Instead, competition has diminished, prices have risen, and patient outcomes have suffered. Studies indicate that when insurers gain greater control over healthcare providers, they reduce payments to doctors and hospitals, discourage expensive but necessary treatments, and place administrative barriers in front of clinicians seeking to provide the best care for their patients.

Australia must heed these lessons. Our healthcare system has been built on a strong foundation of patient choice and access. Yet, as insurers vertically integrate, we risk moving toward a system where treatment pathways are dictated by corporate interests rather than clinical best practice. Patients may find themselves unable to access their preferred doctors, forced to accept insurer-directed care, and subject to treatment limitations based on cost-saving measures rather than medical need.

Additionally, vertical integration poses a threat to market competition. When insurers own and operate healthcare providers, independent hospitals and clinics face an uneven playing field. Insurers may favour their own services in funding decisions, starving competitors of patients and revenue. This leads to reduced innovation, as new entrants struggle to break into a market dominated by a few powerful players who both fund and deliver care.

The broader implications of this shift are profound. Reduced competition in healthcare often results in worse outcomes for vulnerable populations. Studies from the United States show that older, sicker, and lower-income patients struggle the most in vertically controlled systems, facing barriers to accessing the specialist care they need.

A crucial factor in mitigating these risks is strong regulatory oversight. Policymakers must ensure that Australia’s private health system remains competitive, transparent, and centred on patient outcomes rather than insurer profits. This includes enforcing anti-competitive regulations, ensuring fair access to funding for all providers, and maintaining robust consumer protections against insurer-driven restrictions on care.

Australia has a choice: we can allow private health insurers to further entrench their control over healthcare delivery, risking the erosion of patient choice and quality of care, or we can act now to safeguard a system that prioritises patients over profits. Catholic Health Australia calls on policymakers to scrutinise the growing influence of insurers in healthcare provision and take steps to ensure that Australia’s health system remains fair, accessible, and high-quality for all. Read our position statement on insurer vertical control here.

Dr Katharine Bassett is Director of Health Policy at Catholic Health Australia