Prime Minister Malcolm Turnbull has urged people to stick with private health insurance as the Government approves a nearly 5 per cent increase in premiums.

Top family hospital cover will go up by an average of $200 to almost $4,500 a year when the price hike takes effect in April.

The price of singles cover is set to lift by about $100 to almost $1,250.

The 4.8 per cent lift is the lowest in a decade, but still three times the rate of inflation.

Mr Turnbull said the increase would "absolutely" hurt families, but urged people to keep paying for insurance.

Citing labour costs and technology as drivers of price increases, he said he understood the concerns over cost of living.

"Every additional cost hurts," he told Melbourne radio station 3AW.

Health Minister Greg Hunt also acknowledged the cost of living pressures, saying he would work with insurance companies to ensure value for money.

"Every single dollar is important to every single family," he said.

Labor's spokeswoman for health Catherine King said people were "getting less and less" for their money.

"This $200 increase comes on top of some of the highest premium increases on record, spiralling complaints against private health insurers and Australians increasingly discovering they are simply not covered for basic inclusions in their policies," she said.

Price rises will vary between health funds and policies.

Members of the insurance industry said the increase was necessary to ensure health funds stayed ahead of rising health costs.

"Health sector costs are rising faster than CPI inflation and key components of health inflation such as the cost of medical devices are beyond the control of health funds," Private Healthcare Australia chief executive Rachel David said in a statement.

"Health funds, other private sector stakeholders like hospitals and medical specialists need to work with Australian governments to keep input cost down and bend the relentless upward curve of health inflation."

Consumer advocates said the annual rise in premiums provided a good opportunity for people to review their options.

"If you're earning under $90,000 a year and you're under 31, the answer might be not to have private health insurance at all," CHOICE's Tom Godfrey said.

"In fact you're probably best to take it out when you need it.

"Unfortunately people [are] downgrading into what we call junk policies — policies that can cost you up to $1,400 a year but not cover you for around 5,000 treatments including for stroke, heart disease and cancer."