The prudential regulator has slammed health insurers for failing to arrest the exodus of young people in what has been described as a "death spiral", accusing some funds of expecting the government to fix the industry's problems.

Australian Prudential Regulation Authority executive board member Geoff Summerhayes told a parliamentary committee on Monday that a "large group" of health funds were "looking for others to solve the problem" of falling membership numbers.

Australian Prudential Regulation Authority's Geoff Summerhayes has slammed health insurers. Credit:Wayne Taylor

Mr Summerhayes told the House of Representatives standing committee on economics on Monday that APRA would release a consultation paper this week looking at a potential overhaul of health insurers' capital requirements.

He warned insurers to "think about what is your plan B" if government-set premium increases were not high enough to cover their costs, and the trend of increasing costs of servicing an older, sicker membership base continued.