Dr Gillespie agreed the rising cost of health insurance is a source of concern for many Australians. 

He added the Federal government was looking at ways to cut health insurance costs with ‘a review into prosthesis’.

He explained a committee was looking into the price of prosthesis, as there appeared to be a ‘arbitrage’ between the market price and the government listed price of the artificial body parts.

“If everyone was paying market price rather than what the government say the price is, health insurers estimate they could save $800 million a year – and that’s a lot,” Dr Gillespie said.

Dr Gillespie confirmed the rising cost of health insurance concerns the government and that the ‘value judgement issue is critical’. 

“Health insurance costs are going up and there is a concern within the industry and within government about increasing costs. 

“The previous health minister [Sussan Ley] had initiated reviews and ways to help. [Minister for Health] Greg Hunt is now looking at these reviews.” 

Dr Gillespie said Ms Ley was considering gold, silver and bronze systems to make it easier for people to understand and compare what they get. 

“There are a lot of junk policies.’’ he said.

“These are health insurance policies that exclude most of what people need to have covered and just pay for easy things, rather than the expensive things.”

Dr Gillespie said the ‘existential problem’ with health insurance is the community rating which is challenged by low numbers. 

“Around 35 years ago, everyone had health insurance and it was relatively cheap because everyone had it.

“Now only 47 per cent of people have health insurance.

“Imagine how expensive your car insurance would be if only half the cars on the road were insured and the ones that held insurance were the ones likely to crash.

“That’s sort of what’s happening - if health insurance doesn’t remain affordable for the average family and the average worker, less people will hold it, so the premium will have to go up more, which will make it less affordable.”  

Within weeks the Federal government will inform health insurers whether their requested premium rate increases from April 1 have been approved.

In an interview with Citi analyst Nigel Pittaway, the Herald Sun reported health insurance premiums could grow this year by the smallest amount in a decade, as the government tries to “score a win” for consumers.

The article stated former Minister for Health Sussan Ley last year made insurers resubmit applications to raise rates where the increase was on average 5.59 per cent.

“This was below the 6.18 per cent rise in 2015 but well above the current rate of growth in wage,” the report continued.