Health funds have suggested a royal commission into Australia's medical device industry after a class action by hundreds of women suffering pain from vaginal mesh implants.
More than 700 women are suing global healthcare giant Johnson & Johnson in the Federal Court in Sydney over the devices they say have had devastating effects including chronic pain and incontinence.
A Senate inquiry into the cost of private health insurance in Canberra on Wednesday heard the medical device industry had been allowed to get away with overcharging taxpayers and patients for years, costing billions of dollars.
Matthew Koce, chief executive of hirmaa, a body that represents 22 not-for-profit and member-owned health funds, said the mesh case was "gravely concerning", insisting it was time consumers got answers.
"What this highlights is just how in the dark consumers are being kept about their health choices," he told senators.
He said rules that make medical devices more expensive for private patients than public patients were costing taxpayers and consumers $1 billion every year and yet authorities had failed to take action.
It might be time for a royal commission into the industry, he said.
"We have to question why ... these massive foreign-headquartered global organisations are being treated as protected species - it's just extraordinary," Mr Koce said.
"This is the most pressing and most obvious area for reform in private health."
Private health insurers blame expensive medical devices as a reason for higher premiums.
The medical device industry argues prices are lower for public hospitals because they buy larger volumes and points the finger for rising premiums at private hospitals.
Mr Koce also lashed out at private hospital operators including main players Ramsay and Healthscope, arguing executives at those companies were raking in millions.
"It's really becoming almost a licence to print money to run some of these hospitals," he said.
Australia's biggest health fund, Medibank, also fronted the hearing, grilled by Labor's Sam Dastyari about its 29 per cent return on equity.
"That's double the return on equity that the banks make," Senator Dastyari said.
"We tax the banks $6 billion, we give the health insurers $6 billion and you have double the rate of return on equity - that blows me away."
Medibank executive Andrew Wilson insisted the business was run efficiently.
Private Health Insurance Ombudsman director David McGregor said customers were increasingly frustrated by rising costs, with a 40 per cent increase in complaints in the first quarter of 2017.
The Australian Healthcare and Hospitals Association expressed concern about health funds advertising "junk" hospital policies to consumers as a way to avoid tax.
"I don't understand why it's allowed or how it provides any benefit at all," chief executive Alison Verhoeven said.
The inquiry report will be tabled in November.
