The Medibank Private Ltd (ASX: MPL) share price is rocketing on Wednesday after the health insurer released an update to the market.
At the time of writing, the Medibank share price is up 7.08% to $4.84. By comparison, the S&P/ASX 200 Index (ASX: XJO) is up modestly 0.5%.
Let’s take a closer look at what the company announced.
Premium changes locked in for 2026
According to the release, Medibank confirmed that its health insurance premiums will rise by an average of 5.10% from 1 April 2026, following approval from the Federal Health Minister.
The change applies across both Medibank and ahm branded policies. This equates to an average increase of $2.14 per week, or $4.46 per week for a family policy.
Management said the increase reflects rising costs across the healthcare system. These include higher hospital charges, increased claims activity, and broader inflationary pressures.
Medibank also highlighted its efforts to manage costs. The company said it has removed around $125 million from operating expenses over the past eight and a half years, which it believes has helped limit premium increases.
It added that the group continues to focus on efficiency while investing in digital services and preventative health programs to improve long-term member outcomes.
Customer support measures were also outlined, including hardship support options and no gap arrangements for certain services.
A snapshot of Medibank’s operations
Medibank is one of Australia’s largest private health insurers, operating under the Medibank and ahm brands. The group provides hospital and extras cover to millions of members, along with a range of health services through its Amplar Health division.
The company has around 2.75 billion shares on issue and a market capitalisation of roughly $12.4 billion.
Over the past 12 months, Medibank shares have traded between $3.93 and $5.31. At around $4.84, the stock remains below its 12-month high but well above its yearly low.
Medibank also returns capital to shareholders through dividends. Based on the current share price, the stock offers a dividend yield of approximately 4%.
What comes next for Medibank
Premium adjustments are important in supporting margins as healthcare costs continue to rise across the system.
The key issue for the market will be whether higher pricing is sufficient to offset claims growth and utilisation trends in the months ahead.
Medibank is due to report its half-year results tomorrow morning. That update should provide clearer details on underwriting margins, claims experience, and capital management settings for the remainder of the year.
The post Why Medibank shares are jumping 7% today appeared first on The Motley Fool Australia.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.