Australians with private health insurance will face hefty premium increases next year - likely to be twice the rate of inflation - after Health Minister Greg Hunt's deal with the medical devices industry failed to lower costs as promised, the peak body for insurers has warned.

Private Healthcare Australia chairman John Hill said Health Minister Greg Hunt's goal of limiting the next round of premium increases to an average three per cent would be "extremely challenging" to meet, after the cost of devices like knee and hip replacements soared by 8.6 per cent.

Consumers should brace for private health insurance premiums to go up considerably next year.

"Without putting downwards pressure on those costs, you can't put downward pressure on premiums. It's simple mathematics," Mr Hill told The Sydney Morning Herald and The Age ahead of his speech to an Actuaries Institute conference in Melbourne on Wednesday.

He said insurers would have "no other option" but to pass on their rising costs to consumers.