Catholic Health Australia has called for reform of the annual process for approving private health insurance premiums.
Under the existing process, which is been in place for around two decades, the health minister approves or declines requests for increases based on advice from the prudential regulator.
A significant factor is what individual insurers need to meet their prudential requirements.
However, CHA has called for that process to be replaced by an independent expert panel, accusing previous ministers of making "politically motivated" decisions.
According to CHA, health minister Mark Butler should appoint the Independent Health and Aged Care Pricing Authority to oversee the premium approval process.
"The minister should set the parameters and principles that guide how the IHACPA would make its decisions and release them publicly to improve transparency," it said.
"These principles should include customer affordability, the value for money provided by each insurer, and the sustainability of health care providers and insurers."
It is unclear how this process would significantly differ given the current process ties premium approvals to prudential requirements.
CHA’s Health Policy Director Caitlin O’Dea said the annual premium round could achieve better outcomes for hospitals, patients and insurers if it was placed in the hands of independent experts.
“The annual premium round has become a political football and increasingly dysfunctional as a mechanism to deliver a sustainable private health care system,” she said.
“The current system focuses solely on the financial viability of the health funds, not the value of the care delivered and certainly not the sustainability of the hospitals delivering it.
“An independent panel could take into account all the evidence and deliver better outcomes for patients, hospitals and insurers alike, and bring much-needed transparency to the process.”
Ms O’Dea said reform is urgent because insurers are refusing to fund increased health costs, forcing hospitals to weigh up cutting back services or passing the increase on to patients.
“There needs to be a formal process for calculating premiums that takes into consideration what it actually costs a hospital to deliver health care in today’s environment,” she said.
“The system needs to change, and it needs to be fair and independent. An independent expert examining all the evidence should decide whether premiums go up or down," added Ms O’Dea.