When your health insurance premium goes up, you assume the money pays for increased healthcare costs, but that’s not how it works. Claudia Weisenberger investigates.
The top five private health funds which, between them, insure eight in ten Australians, publish audited accounts every year. They show how much of your premium dollar goes to advertising, dividends, executive pay, and more that have little to do with paying for health care. And foreign shareholders.
Start with this country’s biggest insurer Bupa Australia — legally, Bupa ANZ Insurance Pty Ltd — part of Bupa Group, a London-based healthcare conglomerate. Bupa Group has no Australian shareholders and is not listed on the ASX.
Bupa Australia made $497.4m in profit last year. It sent $536m up the chain to British United Provident Association Limited — Bupa’s ultimate parent, a company limited by guarantee headquartered in London. That’s 107.8% of its net profit.
None of this $536m payment to the British parent helps pay for future claims or keep prices low.
Bupa, Medibank, NIB, HCF and HBF dominate the private health insurance market — and their own audited accounts, APRA filings and pay disclosures reveal more than the industry statistics.
Between them, these five funds hold roughly 82% of the market in private health insurance.
Advertising and commissions
NIB spent $214.3m signing people up last year. Advertising and marketing. As a share of premiums collected, that’s 6.2 cents in every dollar: nearly three times what Bupa and Medibank each spend (2.2 cents) — though NIB’s figure is group-wide, it also covers NZ, international student and travel insurance, and NDIS service provider Thrive.
HCF and HBF don’t disclose marketing spend at all — it’s buried inside broader cost lines, invisible to their own members.
Where the profit doesn’t go
Bupa has a preference share, held by that same London parent, that’s contractually paid first. Of the $536m Bupa paid in dividends last year, 70 cents in every dollar ($375.2 million).
This matters: 70 cents of every dividend dollar is already committed before the board decides how much to keep in the business — money that could otherwise soften next year’s premium, or simply stay as capital. It’s built into the ownership structure: paid first, automatically, regardless of performance.
That preference share isn’t the only route to take money out of the business.
Medibank‘s situation is different. It’s still paying $39.7m a year in costs it labels “non-recurring” — three years running, since its 2022 breach exposed 9.7 million customers’ health records, all funded from the same pool meant to pay claims. APRA also holds an extra $250m capital requirement against Medibank because of the breach, and a shareholder class action remains ongoing.
None of it breaks a rule. Every figure sits exactly where disclosure requires — in a note, not a headline.
Executive pay
For context: ACSI’s (Australian Council of Superannuation Investors) 2025 CEO pay survey puts the median at $4.54m for ASX 100 companies and $2.39m for the next 100. Against that yardstick, most of these insurers look unremarkable: Medibank’s $4.72m sits close to market rate for a company its size; HBF’s $1.63m and NIB’s $1.99m sit below it. HCF’s $6.35m is the outlier, but it’s explained by a departing CEO’s one-off final payment, not an ongoing salary.
Sitting within a benchmark doesn’t settle whether it’s justified — where does that revenue ultimately come from?
Bupa is the one insurer where a member can’t check at all. It lumps every director, CEO and CFO into a single figure — $7.447 million, up sharply on long-term incentives that roughly quadrupled year on year — with no way to know what any individual took home.
For a policyholder, that’s the actual finding: four of these five funds pay roughly what you’d expect for a company their size. The one that doesn’t disclose enough to check is also the one whose dividend goes to London.
Returns on equity bigger than the banks
Return on equity measures how efficiently a fund turns its own capital into profit — capital built partly from premiums members already paid, that could otherwise help keep future premiums lower.
Medibank, NIB and Bupa all out-earn every major Australian bank, including CBA, the country’s highest-returning bank, at 13.5%. That’s telling. Banks lend enjoy an implicit taxpayer guarantee (Committed Liquidity Facility) and still return less than insurers legally do – despite taking on comparatively little risk.
There’s a loop worth noting. AustralianSuper, the country’s largest industry super fund, is Medibank’s single biggest shareholder at 8.8%. Some of Medibank’s return flows back into members’ retirement balances — including people who’ve never held a Medibank policy in their life. Someone else’s premium is quietly funding their retirement savings.
HCF and HBF sit below every major bank — the opposite pattern, and roughly what you’d expect from a not-for-profit. With no external owner, more of their capital stays inside the fund or flows back to members, instead of chasing a return to which nobody outside is entitled.
Marketing spend, commissions and executive pay are reported five different ways across five funds — or not reported at all. APRA already collects standardised data from every insurer and publishes a common benefit ratio for all of them. Only a regulator could demand the same for marketing spend, commissions and executive pay — so far, none has.
Where does that profit go next? Increasingly, on expansion into the GP clinics, dental chains and allied health networks the funds now own outright — the same playbook that built US-style managed care, the model Australia has spent decades avoiding.
Some of this money starts life as a taxpayer-funded rebate — $7.9B the government pays toward premiums this year alone. That subsidy props up the same insurers whose books are traced above. It isn’t only policyholders funding NIB’s marketing, Bupa’s dividend to London, HCF’s payouts and every insurer’s executive pay — taxpayers, via the rebate, are too.
Policyholders and taxpayers both pay into these sinkholes. Almost no one gets to see where it goes.
Claudia Weisenberger is a management consultant with deep experience in pharmaceuticals, hospital transformations, and strategic due diligence across four continents. She combines sharp analysis with hands-on execution.