Emily Amos, the managing director of Bupa Health Insurance, says premiums will continue to rise because the cost of health care is increasingly driven by the ageing of the population, medical advances but also inefficiencies and waste.
The federal government is currently consulting on a potential round of new reforms to the private health insurance sector.
Ms Amos said Bupa welcomes this process but urges the federal government to be "bold".
The Bupa health insurance boss pointed to a range of potential reforms to rehabilitation, prostheses, the delivery of care for mental health and ways to attract more younger people into cover.
On rehabilitation, Ms Amos said private health insurers are currently required to pay for care delivered in hospitals even when it may have low clinical value.
"For example, following a knee or hip replacement, private patients are transferred to in-hospital rehabilitation at around double the rate of public patients," she said.
"Not only is hospital-based care significantly more expensive, many people prefer to recover in their own home, surrounded by appropriate support, where clinically appropriate.
"Bupa believes that the majority of rehabilitation should be undertaken in the community provided it is clinically appropriate, unless there are special circumstances certified by clinicians, for example, the patient lives alone and requires around the clock nursing care."
Prostheses is another area that should be reformed, said Ms Amos, calling for the creation of an independent approach to price setting that reflects the market in public hospitals and internationally.
She said, "In many cases, our customers are paying twice for consumable items, such as sponges and glues, that are billed as medical devices as well as being included in the prices insurers pay hospitals for procedures. Bundling prostheses into ‘family groupings will drive cost-effectiveness and allow the measurement, reporting and incentivisation of quality clinical outcomes."
Private Healthcare Australia, of which Bupa is a member, has proposed the phased adoption of an episodic diagnosis-related group (DRG) based prosthesis funding model. This would involve the independent setting of reimbursement amounts based on the 'bundled' prosthesis component of a procedure.
The Medical Technology Association of Australia has argued these reforms will restrict access to new technologies.
Ms Amos said Australia needs to "re-orient" how the private health system delivers care for mental health.
"We want to be able to support our customers across their entire journey through the mental health system, not just when they are admitted to an acute hospital," she said.
"Health insurers should have the ability to fund community-based care, including making top-up payments for mental health MBS items to reduce the often high out-of-pocket cost of seeing a psychologist or psychiatrist.
"Expanding the services health insurers can fund through Chronic Disease Management Programs to include mental health nurses, social workers and community pharmacists, will also help the private system deal with the chronic diseases from which so many suffer."
Ms Amos also said Bupa supports the move to allow dependent children to remain on their parents’ private health insurance policies until they are 31.
"While we applaud efforts to encourage participation by young people, addressing the cost barriers will have limited impact if the product is fundamentally irrelevant to this group, which is why insurers need the flexibility to evolve their product offer.
"Enabling insurers to fund a broader range of non-rebateable health and wellbeing services will have a far greater impact in attracting young people to private health insurance."
Ms Amos added, "Our priority is ensuring our customers receive the affordable, personalised, connected, high-value care that helps them lead longer, healthier and happier lives.
"We welcome measures that reduce unnecessary costs and place less pressure on premiums, but importantly are in step with how Australians are living their lives today and support their health and wellbeing.
"These considerations will be front of mind as we continue to work with the government, hospitals and healthcare professionals to pursue real reform."