Australia's peak medical group has warned the country's private health system is on a "precipice" as young Australians abandon costly insurance.
Australian Medical Association president Dr Tony Bartone says the industry could hit a tipping point within 12 months.
He says an increasing number of young Australians are shunning private health insurance, while a higher proportion of older patients drive up premiums as they become more expensive to insure.
With tens of thousands of people leaving the private health system, more burden is being placed on Australia's already overstretched public health system.
"Everyone's got to sit down and find a solution to the problem," Dr Bartone told AAP.
"It's the public health system that's also riding on this."
Dr Bartone said bigger tax rebates were needed to attract young Australians to private funds while the industry needed to improve the clarity around policies and offer more for less.
The AMA has released its annual scorecard on private health insurance, revealing the top performing funds when it came to coverage in each state and territory, with the best policy dependent on where people lived.
Depending on the state or territory, open membership insurers - accessible for any person - only covered around 25 per cent of hospital-related charges like beds and nurse care.
In some states or territories, open membership insurers only covered around 26 per cent of medical services with no gap (out-of-pocket) costs.
The scorecard also lists the highest and lowest benefits paid for medical services, with consumers potentially able to be covered by an additional $350 for a typical knee replacement depending on their insurer.
But these costs also relied on where policyholders lived, with Bupa customers in Victoria covered for nearly $350 more for a hip replacement than customers in NSW, ACT, WA, Queensland and the Top End.
The scorecard also pointed out how the number of policies excluding particular conditions now outnumber the number of non-exclusionary policies.
The number one complaint people had with their private health insurance policies was about benefits, in terms of non-payment or delayed payment, as well as out of pocket costs.
The AMA said customers should always get everything in writing, with incorrect or unhelpful advice provided verbally often leading to people misunderstanding what they were covered for.
The federal government introduced new reforms that came into effect in April requiring insurers to tier their policies from Basic, Bronze, Silver to Gold.
But Dr Bartone said the government's review did not address affordability or value for money.
There had also been a steady increase in premiums averaging three-to-five per cent per year as wages growth remained stuck at around two per cent.
Health Minister Greg Hunt said on Thursday he was looking at more "hospital in the home" options to be covered by insurance, like mental health or orthopaedic recovery.
Mr Hunt told Sky News existing law barred this sort of care being covered by private insurance which could lead to better outcomes while reducing strains on the health system.
Labor health spokesman Chris Bowen said the private health insurance sector should be examined by the Productivity Commission.
"Clearly the band-aid approach that they're taking to private health insurance is not working," Mr Bowen said.
The chief executive of the body representing private health insurers, Private Healthcare Australia, called the AMA's report "alarmist".
But Dr Rachel David told ABC there was a "very real financial barrier" for young people trying to get private cover.
Australian Associated Press