New analysis released on Friday suggests Australia's four biggest health insurers recorded a post-tax surplus of nearly $1.5 billion in 2023.
But about 7.9 cents in every dollar amounted to the discount Bupa, Medibank, HCF and NIB have given themselves when their members' head into single-bed rooms in NSW public hospitals.
The major insurers in recent years have stopped paying NSW's gazetted single-room rate of $892, preferring instead to fork out the lower shared-bed rate set by the federal government.
The difference amounted to $140 million in the 2023 financial year.
"These health insurers are expecting NSW hospitals to subsidise their record profits," Health Minister Ryan Park said on Friday.
"They didn't reduce premiums when they stopped paying their bills, why should they increase them?"
Private insurers have argued the higher rate is a rort, and legislative attempts to mandate its payment amount to a health tax on 3.7 million hospital cover policyholders.
They warn hiking costs could lead to people dropping their cover, meaning the government gets the full bill for any hospital visit.
"This health tax will drive up the cost of an average silver health insurance policy by $156 a year, making NSW the most expensive state in Australia to hold health insurance," Private Healthcare Australia said.
Health Minister Ryan Park isn't happy with "subsidising" health fund profits. (Bianca De Marchi/AAP PHOTOS)
Its chief executive Rachel David said insurers were operating on fine margins and pressuring higher payments could force some funds underwater.
Data from the national health regulator showed Australians paid $27.3 billion in premiums and made $22.6 billion in claims in 2023.
The average fund recorded a net margin after management expenses of 6.6 per cent, though Bupa, Medibank and NIB were all higher.
Not-for-profit HCF's net margin was under one per cent.
The health funds' stand-off with the NSW government continues despite a meeting between insurers, Mr Park and NSW Treasurer Daniel Mookhey on Thursday.
The parties had however agreed to continue dialogue, the government said.
Negotiations with most other funds have been more fruitful, with 44 of 53 agreeing to pay the higher single-bed room rates where required.
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