The ACCC has issued its 2018-19 annual report on private health insurance, which it is required to produce by an order of the Senate.
The regulator said the report shows that, for the first time, the majority of hospital policies contain exclusions.
"More than 57 per cent of policies held by Australians contain exclusions, up from about 44 per cent in the previous year," it said.
“Many people may not be aware their policies may have exclusions and don’t realise they would not be covered at all for treatment as a private patient for those conditions,” said ACCC Deputy Chair Delia Rickard.
“We’ve been working with private health insurers about how they can better communicate such detrimental policy changes to consumers.”
“Insurers need to make sure these changes are communicated clearly, prominently and in a timely manner, to avoid misleading consumers,” said Ms Rickard.
The report acknowledged the rate of increase in average annual premiums has slowed in recent years but remains above inflation and wage growth.
It found the number of hospital policies with an excess or co-payment increased slightly from 84 per cent to 85 per cent, while 86.8 per cent of in-hospital treatments were delivered without requiring any gap payment, down slightly from 87.8 per cent in 2017-18.
"Complaints to the PHIO have decreased by over 11 per cent since June 2018. Over the same period, contacts to the ACCC relating to private health insurance decreased by 17 per cent, the same percentage decrease as from 2016-17 to 2017-18," it said.
The regulator said it has concerns over the use of consumer data.
“Several health insurers offer rewards schemes for their members, some of which include the use of tracking apps to record physical activity. Such information may in some cases be combined with other external data sources to profile consumers for targeted marketing,” added Ms Rickard.
“While Australian consumers can benefit from these programs, we are concerned that few consumers may be fully informed or fully understand the scope of data collected when they sign up for, or use, such services.”