Managed well, Risk Equalisation has an important social role to play in ensuring health insurance is available to all Australian citizens, alleviating considerable pressure from the public purse. 

I'd like to highlight an area of regulation pertaining to the private health insurance sector that urgently requires reform.

The Risk Equalisation scheme must be amended, because at the moment, it totally lacks equity. Through my role as Chairman of HIRMAA (the peak body for restricted and regional funds I've been raising this contention with the Federal government (and the previous one) for quite a while. Unfortunately regulatory reform in this area is being stymied, due to no good reason I can see, other than the powerful opposition of the big insurers.

Risk Equalisation is essentially a new name for what we used to call reinsurance. It's a concept which has been a central aspect of private health insurance since October 1976 (having been preceded by a similar arrangement known as the Special Account that had been introduced in 1959). 

I agree we need to retain the system of Risk Equalisation funds pooling. However, because of the differences between the big and small players, a far more equitable approach would be to have two separate pools.