Each year, the federal government pays health funds more than $5 billion to subsidise health insurance premiums. It is a significant sum of money, more than one-third of the total amount it pays to the states and territories for all health services and infrastructure.

At $5.4 billion this financial year, rising to $5.91 billion by 2016-17, the money pays for the 30 per cent rebate for most people who take out private health insurance.

The rebate is meant to keep costs down for consumers, but - as evidenced by the 6.2 per cent average increase in premiums announced on Monday - there is precious little evidence the rebate has achieved this in any meaningful way.