Health insurance costs will keep rising — but Health Minister Greg Hunt says the increases won't be as high under changes he has announced today.

Key points: The Government says the aim of the changes is to reduce the pressure on premiums

The Government says the aim of the changes is to reduce the pressure on premiums Customers will be given the option to increase their excess limit

Customers will be given the option to increase their excess limit Government criticised for decision not to ban "useless" policies

The most clear-cut change is for people under 30, who would be eligible for a series of discounts up to 10 per cent.

For other people, Mr Hunt said that over the next three years "we want to take out some hundreds of dollars out of the costs that they would otherwise be paying".

But he would not say exactly how much he thought premium rises could be limited.

"This is a package which will deliver reduced pressure on premiums over a series of years," Mr Hunt said.

He said the aim was to reduce the pressure on premiums — but also stressed the other key aspect of the changes, which is to make it easier to understand what is covered by a plan.

AMA president Michael Gannon said at the moment there was an absolutely bewildering array of policies.

He told radio 2GB the AMA had counted more than 20,000 different versions.

"You shouldn't need to be three months into a medical degree to understand the clinical definitions and what you are and aren't covered for," Dr Gannon said.

Health insurance premiums have increased by an average 5.6 per cent every year since 2010, and the Government is hopeful next year's rise could fall below 4 per cent.

Labor's health spokeswoman Catherine King noted Mr Hunt was giving no guarantees that the price rises would be lower at the next round of increases in April.

"Certainly we would welcome if there is any downward pressure on private health insurance premiums, but from what we can see there is no guarantee it will be less than 4 per cent," Ms King said.

And she argued the discount for young people might not be enough to encourage them to take out private health insurance.

One of Australia's largest funds, Bupa, said it believed reining in price rises would be "quite challenging".

"It may be just a bit of a stretch … given the way claims are behaving," Bupa managing director of health insurance Dr Dwayne Crombie said.

"It will be the lowest in 10 years, there'll be no doubt about that."

The Consumers Health Forum said the changes should help contain price rises and deliver policies that are easier to understand.

"This should be a breath of fresh air for families and individuals under pressure and contemplating dropping their cover after years of above inflation premium rises each year," Forum chief executive Leanne Wells said.

But she warned that the discounts for under-30s might undermine the system.

Ms Wells said health funds were presumably hoping that more young members would help subsidise the extra costs that older members incur.

She warned that young people were facing financial pressures and low wage increases, so only a small number of young adults would take out insurance despite the discounts.

Lower premiums by increasing excess

For the first time since 2001, customers will be given the option to increase their excess limit.

The maximum excess for singles is currently $500, but that will be lifted to $750, while families will be able to increase their limit from $1,000 to $1,500.

Ms Jack said it was about giving people more options.

"If you choose to take a larger excess on the policy, then you pay a lower premium," she said.

The Government said the move would help reduce premium hikes, but Dr Crombie said Bupa's modelling suggested higher prices over the medium term.

"Because there's a higher excess, there's less premium in the pot," he said.

The Royal Australian College of General Practitioners president Dr Bastian Seidel said he was worried people will get caught out if they choose a higher excess.

"If you can afford it that's great, but if you can't afford it you want to be really careful before signing up," Dr Seidel said.

Additional assistance for mental health patients

Patients that need to upgrade their hospital cover to access mental health services will now be able to do so without a waiting period.

The Brain and Mind Centre's Professor Ian Hickie has praised Mr Hunt.

"The Minister has taken a very important step of action. To make sure that mental health is central to the discussion and not peripheral or excluded," he said.

But Professor Hickie said the work was far from over.

"There's a much bigger challenge ahead. And that's how to use private health insurance to cover specialised care outside of hospital," he said.

The Royal Australian College of General Practitioners praised the Government for removing the coverage of some natural therapies such as homeopathy, aromatherapy, pilates and yoga.

"That's a reasonable approach because private health insurance should only cover evidence-based treatment," Dr Seidel said.