Health insurers and private hospitals are stepping up calls for government reform to help reverse a membership decline the regulator has warned is unsustainable, as tens of thousands of younger Australians drop their cover before the next premium rise.

Official data released by the Australian Prudential Regulation Authority on Tuesday showed that 46,969 fewer people aged between 20 and 34 had hospital cover in December, compared with a year earlier.

Health insurers are calling for government help to arrest the decline in membership. Credit:Gabriele Charlotte

APRA said while releasing the data that the health insurance industry "continues to face risks associated with affordability and the associated value proposition of private health insurance products".

Health funds are preparing to hike premiums by an average of 2.92 per cent in April, under changes approved by Health Minister Greg Hunt and announced in December, and are demanding government assistance to make premiums more affordable.