Young Australians are continuing to abandon their private health insurance cover in droves, as consumer advocates argue they're "voting with their feet" and health economists reignite calls for a review of the system.

Key points: More than 9,000 people ditched their private health insurance late last year

More than 9,000 people ditched their private health insurance late last year Out-of-pocket costs for hospital visits rose 3.2 per cent in 2019

Out-of-pocket costs for hospital visits rose 3.2 per cent in 2019 That left patients facing, on average, a $300 bill for their hospital visit

The latest Australian Prudential Regulation Authority (APRA) figures show overall, about 9,400 people dropped their private health cover in the final three months of last year, meaning just 44 per cent of Australians now have basic hospital cover.

In line with trends and of concern to experts, the largest decline in coverage was for young people aged between 25 and 29.

APRA said the private health industry continued to "face risks associated with affordability" that resulted in an ongoing decline in membership.

Its report also showed out-of-pocket expenses for hospital visits increased by 3.2 per cent over the year, with people paying an average gap payment of $300 in the last quarter.

Macquarie University health economics professor Henry Cutler said the data reinforced trends that showed young and healthy people's departure from private health left insurers covering a larger proportion of older and expensive users.

"It means those with low costs are dropping out of private health insurance, and those with high costs are entering," Professor Cutler said.

"That'll obviously have impacts on the total cost of private health insurance, and how private health insurers fund that cost."

Consumer group CHOICE said it was "no wonder" Australians were abandoning private health care.

"Today's APRA statistics are further proof of the death spiral in private health insurance," CHOICE's Dean Price said.

"Young people are voting with their feet and telling health insurers what they're offering is poor value."

The chief executive of the private health insurance industry's peak representative body, Private HealthCare Australia, argued health funds were paying out more benefits than ever before.

"$21.6 billion in benefits in the year 2019 is a record amount of money we've paid towards people's health care," Rachel David said.

"The value proposition for private healthcare is still very good."

From April, private health insurance premiums will jump by an average of 2.92 per cent.

But Dr David argued the industry had worked hard to keep costs low.

"We understand that consumers are finding it difficult in some cases to afford high premiums but we need to reassure people that when the time comes to claim, they'll be able to claim for some of the highest-cost procedures in the world and most won't be paying an out-of-pocket."

Blame games at play

As premiums rise and Australians continue to dump their private health insurance, various parts of the industry have tried to assign blame.

According to the private health insurers, part of the problem lies with the medical device industry.

Federal Health Minister Greg Hunt recently struck a deal with medical device manufacturers to lower prices for expensive items like knee and hip replacements.

But Dr David said they still cost too much.

"The biggest risk we're facing at the moment, which is crystal clear in the APRA data, is the growth in the volume and the cost of medical implants.

"This has been an issue we've raised consistently with the Federal Government, even as the amount of surgery has remained relatively consistent year on year, the amount of medical devices that have been claimed has risen massively out of proportion."

The medical device industry strongly disputed that, putting the blame back on insurers.

"Private health insurers should be forced by Government to drop their premiums below zero next year so long as national participation rates continue to decline," Medical Technology Association of Australia chief executive Ian Burgess said.

Mr Burgess argued the price of medical devices paid by health insurers had dropped by up to 38 per cent in the past three years as a result of government reforms.

Professor Cutler said the cost of prostheses was not the main reason behind premium rises, calling for insurers to focus more on preventative health.

He also backed federal Labor's repeated calls for a Productivity Commission review into the sector.

"Private health insurance seems to be unsustainable at the moment in the long term, particularly if we have this pattern of membership change whereby older people are entering and younger people are leaving," he said.

"We can't keep going down the same path, there needs to be some structural change within the way private health insurance works and interacts with the rest of the healthcare system, and for that to occur there needs to be a fairly large review."

But Mr Hunt once again ruled out a review.

"What we don't want to do is stop the process of doing real things," he said.

"That's just an excuse to do nothing for two years — I'm not into doing nothing for two years.

"Right now we're involved in a continuous process of reform. We've made the biggest changes in a decade, which have delivered the lowest price changes in 19 years."