What the 2025 PHI Risk Equalisation Results Reveal

Every year, Australia’s private health insurance industry publishes its risk equalisation results. Most people either ignore them entirely or misunderstand what they actually mean. That’s understandable because the system itself is complex.

Under the Private Health Insurance Act 2007, all insurers participate in a mechanism designed to preserve community rating. In simple terms, Australians pay the same premiums regardless of their health status, while insurers covering older or higher-risk populations are partially compensated through an industry-wide redistribution pool.

The system operates through two primary mechanisms:

• the Age-Based Pool (ABP), which redistributes a portion of claims for older members
• the High Cost Claimants Pool (HCCP), which redistributes catastrophic or very high-cost claims

The intent is important. Without risk equalisation, insurers would have powerful incentives to aggressively avoid older or chronically ill members. The scheme exists to prevent that dynamic from taking hold. So the results are not intended to act as a performance leaderboard, but they do reveal how the demographic and health profile of the industry is shifting beneath the surface.

The demographic divide is becoming clearer

The 2025 results continue reinforcing a growing structural divide across PHI. Funds with younger and healthier memberships continue contributing heavily into the pool, while funds with older and higher-utilisation populations continue receiving larger transfers.

For example, nib contributed roughly -$244m into the system this year, while funds like HBF and Australian Unity Health remained major recipients.

That doesn’t mean one group is “good” and the other is “bad”. It simply means the industry is increasingly separating into different demographic realities. Those realities matter strategically because they influence everything from pricing pressure and claims sustainability through to digital engagement and preventative health investment.

Funds attracting younger and healthier members are building very different future economics to those carrying older, more complex populations.

Bupa’s reversal may be one of the most important signals

One of the most interesting shifts in the latest data is Bupa moving from a major net recipient to a net contributor.

Over the past several years, Bupa’s net position has steadily improved:

• 2021: +$133m
• 2022: +$82m
• 2023: +$63m
• 2024: +$17m
• 2025: -$9.6m

That is a significant structural transition.

It potentially reflects a combination of demographic repositioning, younger acquisition cohorts, changing utilisation patterns, improved claims management, or broader portfolio strategy changes. Whatever the exact drivers, it suggests Bupa’s relative membership risk profile has materially shifted over time.

At the same time, nib continues strengthening its position as the industry’s largest net contributor. That likely reinforces the ongoing commercial advantage of attracting younger, digitally engaged, lower-utilisation cohorts.

Chronic disease and prevention are becoming commercial issues

What the industry is now experiencing is the growing financial reality of chronic disease and ageing populations. Risk equalisation softens the impact, but it does not eliminate it entirely.

Funds with older memberships, higher chronic disease prevalence, and more complex utilisation profiles will continue facing increasing structural pressure over time.

That is one reason prevention, digital engagement, and behaviour change are rapidly shifting from “innovation initiatives” into core commercial priorities.

The future sustainability of PHI may depend heavily on whether insurers can influence long-term health trajectories before members become high-cost claimants. The earlier funds can intervene through prevention, navigation, virtual care, or chronic disease management, the greater the long-term impact on both member outcomes and financial sustainability.

When the major outliers are removed, a more nuanced competitive landscape emerges among small and mid-sized insurers.

Smaller funds are still proving resilience matters

One of the more underrated insights from the results is that several smaller and restricted funds continue demonstrating remarkable resilience despite scale disadvantages.

Funds like Peoplecare, Mildura Health Fund, and Westfund continue showing that scale is not the only determinant of sustainability.

Community alignment, member trust, disciplined operating models, and strong retention still matter enormously in PHI. In some cases, smaller funds may actually hold cultural and engagement advantages that larger organisations struggle to replicate.

Risk equalisation is becoming a strategic signal

Risk equalisation was originally designed as a balancing mechanism. Increasingly though, it’s becoming something more valuable: a strategic indicator of demographic positioning and future sustainability.

Because beneath the accounting transfers sits a much bigger story:

• who is attracting future members
• who is retaining healthier cohorts
• who is carrying growing chronic disease burden
• who is adapting to changing healthcare utilisation
• and ultimately, which insurers are best positioned for the future of healthcare

For leaders across PHI, the most important insight may not be who paid or received the most this year.

It may be what those trends reveal about where the industry is heading next.