Medibank Private hopes to snap up smaller rivals if they struggle to cope with premium increase limits planned by Labor if it wins this year's federal election.
The Labor opposition has pledged to limit health insurance premium rises to two per cent for its first two years in office, which could open opportunities for sector giant Medibank to expand.
"In the short- to medium-term, we see the potential to make one or two more small acquisitions to build our health services capability," Medibank said on Friday.
"We will consider acquiring a PHI (private health insurance) business in a stressed operating environment."
The annual cost of healthcare in Australia has risen by 4.5 per cent above inflation over the past decade.
The Reserve Bank this month cut its inflation forecast for the year to June 2020 to 2.0 per cent, which would mean healthcare costs rise 6.5 per cent in FY20 if that trend continues.
Medibank will raise premiums by 3.3 per cent this year, down from 3.88 per cent in 2018 and broadly in line with an industry weighted average 3.25 per cent.
Medibank's health insurance premium revenue rose 2.1 per cent to $3.24 billion in the six months to December 31, while health revenue rose 9.8 per cent to $320.6 million.
Operating profit rose at both units but overall first-half profit slipped 15.4 per cent to $207.7 million after the private health insurer's income from investments slumped amid challenging market conditions.
Stripping out investment income, Medibank's pre-tax profit was flat at $286.3 million as a 2.7 per cent overall lift in revenue was offset by an increase in expenses.
"This result demonstrates that Medibank's core business continues to get stronger," chief executive Craig Drummond said on Friday.
The company added 6,400 resident policy holders in the six months to December 31, more than compensating for the 4,200 lost in the prior corresponding period.
It said it aimed to modestly increase market share over the full year.
Medibank, which raised its interim dividend 0.2 cents to a fully franked 5.7 cents, said it expects to provide an update on additional productivity initiatives when it announces its full-year results in August.
Medibank shares rose 12.5 cents, or 4.5 per cent, to $2.885 by 1120 AEDT.
MEDIBANK'S H1 RESULT
* Net profit down 15.4pct to $207.7m
* Revenue up 2.7pct to $3.561b
* Interim dividend up 0.2 cents to 5.7 cents, fully franked
Share
