Australia’s private health insurance risk equalisation deficit rose to about $9.3 billion in 2024-25, with New South Wales, Victoria, and Queensland accounting for the largest shares of the pool and annual net transfers through the scheme reaching about $384 million, according to new data from the Australian Prudential Regulation Authority (APRA).
APRA’s latest private health insurance risk equalisation statistics detail the net risk equalisation result for each insurer and the gross deficit by state and territory for the year ending June 30, 2025. Nationally, the gross risk equalisation deficit increased from about $8.66 billion in 2023-24 to roughly $9.30 billion in 2024-25. New South Wales recorded the largest gross deficit at approximately $3.19 billion, followed by Victoria at about $2.32 billion and Queensland at around $1.92 billion. South Australia, Western Australia, Tasmania, and the Northern Territory collectively made up the remaining portion of the national figure.
Annual net transfers across the system were about $384.2 million in 2024-25, compared with approximately $413.2 million in the prior year. APRA reported four quarters of actual transfers totalling about $407.4 million. The risk equalisation arrangements, administered through the Risk Equalisation Special Account (RESA), redistribute a portion of hospital benefit costs associated with older and higher‑risk members from insurers with lower‑risk profiles to those with higher‑risk books. For funds with younger membership and lower average claims, this typically results in net payments into RESA, while funds with older or higher‑claiming members are net recipients.
The statistics also set out net national transfer positions for each insurer, indicating how individual funds have either contributed to or drawn from RESA over time. Large open‑membership funds, regional not‑for‑profit insurers, and restricted membership funds show differing net transfer outcomes, reflecting variations in age distribution, geographic concentration, product mix, and utilisation patterns. The 2024-25 data provide an updated view of how demographic shifts, chronic disease burden, and procedure volumes are being shared across the market. The pattern of gross deficits and net transfers is likely to be considered in capital planning, pricing assumptions, and product strategy, particularly for funds experiencing changes in membership composition.
The release of APRA’s statistics comes as private health insurance premiums are set to increase by an average of 4.41% from April 1, 2026, reflecting growth in claims and the rising cost of delivering medical and hospital services, which climbed about 5% in the last financial year. Private Healthcare Australia chief executive Dr Rachel David said health funds are managing the interaction between cost pressures and affordability for members. “More people are using their health insurance for high-cost hospital care such as joint replacements and cancer treatment, and the cost of delivering care continues to rise. This premium increase reflects those realities. If health funds could keep premiums the same without jeopardising their ability to pay claims, they would. The industry is acutely aware of how tough many Australians are doing it right now,” David said.
David said that in parallel with premium adjustments, funds are concentrating on members’ out‑of‑pocket costs and care pathways. “We’re seeing more no-gap and known-gap fee services to give people greater certainty about costs, along with new models of care that allow patients to safely receive treatment at home. These include services such as drug and alcohol rehabilitation, chemotherapy, and post-surgical care. These innovations are helping patients save money, reduce travel, and recover in greater comfort. This is the future of accessible, affordable care,” David said. Health funds are also expanding health management and prevention programs to support members with chronic conditions and to limit avoidable high‑cost episodes. The interaction between these programs and the risk equalisation framework remains a factor, given that RESA is driven largely by age and high‑cost claims.
The premium change is expected to increase revenue for private hospitals facing higher operating costs and variable occupancy in the post‑pandemic period. “Private hospitals are a critical part of Australia’s healthcare system, and this adjustment will help ensure they remain viable and available when patients need them,” David said. More than 15 million Australians have private health insurance, including about 12.6 million with hospital cover. APRA’s 2024-25 risk equalisation results, viewed alongside the 2026 premium round, are expected to inform pricing reviews, product design, and communication with corporate and retail policyholders.
