Young Australians who sign up to private health cover will benefit from discounts on their premium under sweeping Turnbull government reforms created to entice more young people into the system and slow the rising cost of health insurance.
Health minister Greg Hunt said the discount scheme would be a "real incentive for young people to come into the system", speaking on the ABC ahead of the Friday announcement.
The idea is to encourage as many young people as possible to take out private health cover if they can afford it, as young people don't tend to claim as much, and therefore effectively subsidise the claims of older people, who tend to claim more frequently.
To entice young people to take out health insurance, funds will offer discounts of 2 per cent a year for a maximum of five years for people aged between 19 and 29.
Private Healthcare Australia, the peak body representing health insurance companies, said the reforms would deliver "value to Australians young and old".
Prime Minister Malcolm Turnbull said the package of measures would benefit all Australians and make comparing policies easier.
A cut to the price insurers must pay for some medical devices is also expected to drive a reduction in the size of premium rises.
That will save them about $1 billion over the next four years and is expected to be the biggest driver of lower premium rises, starting from April 2018.
People will get the option to increase their excess - $750 for singles and $1500 for families - in exchange for lower premiums.
"And that will go straight through to reduce premiums", he said.
The ABC reports that insurance premiums have increased by an average 5.6 percent a year since 2010. "We will pass on in full the savings from lower prostheses prices to our customers, which will help to keep downward pressure on premiums", said Medibank Private chief executive Craig Drummond.
"It's about information and simplicity; ensuring that all Australians are able to understand the impact of their policies, what they are covered for and what they aren't covered for", Mr Hunt said. By the age of 40, people could be paying an extra 20 per cent in premiums if they decide to take out cover!
They will now be categorised into four levels of cover, Gold, Silver, Bronze and Basic, which is created to make it easier to work out which product is right for you.
Benefits will not be available for a range of natural therapies, including aromatherapy, herbalism, homoeopathy, kinesiology, naturopathy, pilates, reflexology, shiatsu, tai chi, and yoga.
The AMA has also criticised the government's failure to abolish "junk" private health policies, such as those which only give cover in public hospitals.
The ABC understands the Government has resisted pressure to dump low-priced policies, regarded as "junk" policies by some consumer groups, because of the flow-on cost it would have on other insurance premiums.
Private Health Insurance Ombudsman powers will be boosted to ensure consumer complaints are resolved clearly and quickly.
AMA president Dr Michael Gannon welcomed the reforms, saying they provided "much-needed transparency, clarity, and affordability to the private health sector", but he said significant challenges remained.
Labor does, however, welcome cuts to the cost of devices on the prostheses list.
"We need serious reform which addresses the simple fact that the costs will continue to increase year on year".