Cheaper premiums expected in 'biggest' private health insurance reforms in 15 years

Federal Health Minister Greg Hunt Source: AAP

Australians with private health insurance are being promised cheaper premiums and easier access to mental healthcare under a raft of proposed changes.

Health Minister Greg Hunt on Friday will announce a major shake-up of the system, with those under 30 expected to be the biggest beneficiaries.

They will be offered a two per cent discount every year up to a maximum of 10 per cent, which they will keep until they are 40.

Mr Hunt believes the move will encourage young people to take up private health insurance while helping other policyholders.

"The more young people you have in the system, the lower the average cost of premiums for everybody," he told ABC TV.

There will also be the option for people to increase their excess to $750 for singles and $1500 for families in exchange for lower premiums.

But it's expected a cut to the price insurers must pay for some medical devices will drive the biggest reduction in premiums.

Mr Hunt says the government's agreement with makers of hip, knee and cardiac devices will save about $1 billion over the next four years.

"And that will go straight through to reduce premiums," he said.

Premiums have increased an average of 5.6 per cent a year since 2010, but Mr Hunt wouldn't put a figure on how much that will go down.

"I'm working with the private health insurers to help drive down premium pressures and they have guaranteed in writing they will pass through all of the cost savings."

The government will also take natural remedies like homoeopathy and reflexology off the list of items covered, upon advice from the chief medical officer that there's no basis for paying a Commonwealth subsidy on them.

Policies will be re-categorised as either gold, silver, bronze or basic packages while waiting periods on mental health cover will be scrapped.

"It's the biggest private health insurance reform in 15 years," Mr Hunt said.

Labor's health spokeswoman Catherine King said young people will only save about 70 cents a week while older Australians won't see a dollar returned to their back pocket.

"It's clear from this package that the Turnbull government only cares about getting as many people as possible to sign up for private health insurance - it doesn't care about what happens when they try to use it," she said in a statement.

Labor, however, welcomes the cut to the cost of devices on the protheses list.

Australian Medical Association president Michael Gannon says the move won't solve the issue of affordability, but it is a step in the right direction.

He said, while the one-off savings will help, longer-term measures to manage the rising costs of healthcare were needed.

"The biggest problem in the affordability of private health insurance is the amount that's going into the pockets of the for-profit insurers," he told ABC radio.

"We need serious reform which addresses the simple fact that the costs will continue to increase year on year."

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