Private health insurance has been slammed as a "total waste of money" with Greens leader Richard Di Natale labelling it a spectacular policy failure during a Senate hearing.
Health department officials were grilled about the conduct of insurers during an estimates hearing on Wednesday, with senators asking about skyrocketing premiums on top of the $6 billion a year taxpayers spend on the private health insurance rebate.
Despite the costs, private health cover had failed to take the pressure off public hospitals, Senator Di Natale said.
"This seems like a spectacular failure of public policy. How is this a sustainable health policy?" he asked the committee.
"I just don't know why a consumer would take it out. It seems like a total waste of money."
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Health department boss Martin Bowles said benefits paid by insurers continued to rise, insisting there were reasons for people to maintain their cover.
A review of private health insurance, which will attempt to create a gold, silver and bronze model for categorising policies, is set to report to the government in the second half of the year.
"The committee is evidence we obviously think we need to have a look at this in the broad," Mr Bowles said.
"It is time for us to have a look at this and we are."
Official figures show the number of Australians with hospital cover and general cover fell in the December quarter, continuing a downward trend.
Senator Di Natale, who worked as a GP before entering parliament, is calling for an end to the $6.4 billion of taxpayer subsidies to the sector "that is ripping off consumers", saying the money should be spent on public health.
"As a doctor I now advise people to save their money rather than spend it on a product that delivers such poor value for money," he said in a statement.
"The government knows the industry is a failure, they know insurers are selling policies that provide no value to the consumer and they are hiding behind an 18-month-old review rather than making much needed changes to the industry."
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