There are a couple of direct ways that investors can gain exposure to the private health insurance industry on the Australian share market.
These are of course industry leaders Medibank Private Ltd (ASX: MPL) and NIB Holdings Limited (ASX: NHF).
But which one is the better option? Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about these blue chips.
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What is the broker saying?
Macquarie highlights that there has been increased promotional activity in the industry recently, with providers offering "free weeks." It said:
Industry feedback anticipates a higher level of [promotional] activity holding for the next ~12 months given the strong Gross Margins achieved in 2H25. To analyse the competitive landscape and evaluate the ability of listed insurers to meet their FY26 policyholder growth targets, we update our promotional activity tracker for 34 brands (in the direct channel).
Sep '25 findings: The number of insurers offering promotions increased over the last month. Of the listed funds, the AHM and nib brands decreased the number of free weeks offered while the Medibank brand increased its free weeks offering. 6 brands are offering promotions well into Nov '25.
The broker sees some risks to Medibank and NIB's earnings if the promotions limit policyholder growth and increase customer acquisition costs. It adds:
Should the industry grow at a rate slower than the 2.2% recorded in FY25, the persistent competitive environment is likely to keep customer acquisition costs elevated. This could also affect management performance metrics, especially MPL's targets of increasing market share by 25-75 basis points from FY24 to FY27. For MPL, a 0.25% change in policyholder growth corresponds to ~0.3% change in EPS, and ~0.6% for NHF.
Medibank or NIB shares?
As you might have guessed from the above, Macquarie isn't overly enthused with either option right now.
However, it rates only one of them as a sell. That is NIB shares, which it has an underperform rating and lowly $5.60 price target on. This implies potential downside of 25% from current levels.
For Medibank shares, the broker has a neutral rating and $4.70 price target on them. This is a touch lower than where its shares are currently trading.
Commenting on both ASX shares, the broker said:
Conclusion: On a 12-month view, underlying indexation and volume trends are clearly deteriorating underscoring our long-standing negative outlook on the sector. We maintain our Neutral recommendation on MPL-AU and Underperform on NHF-AU.
