O'Dowd backs health policy amid 'death spiral' warnings

KEN O'Dowd, federal member for Flynn stands by the government's private healthcare initiatives, despite warnings the system is at risk of a "death spiral".

The Grattan Institute released a report yesterday that found Australia's health care system had become increasingly unfair, costly and confusing.

It said the Federal Government faced an impending crisis, if it didn't conduct an urgent reform of private healthcare.

If current trends continued Australia would find itself in a "death spiral" where young and healthy people abandoned cover leaving a larger proportion of less healthy and older users who would need higher amounts spent on their health.

The institute said this could keep forcing premiums up and lead to a further exodus of healthy users.

"The [government] is going to have to step in sometime, probably in the next 18 months or so, and it's going to have to confront the issue about its very policies, its red tape needs to be addressed and how is it going to do that, and what is the future of the industry," Grattan's health program director Stephen Duckett said.

A decline in private health cover has taken a toll on this region's only private hospital, Gladstone Mater.

In October Mercy Health and Aged Care closed its maternity ward.

In February it reduced opening hours from seven to five days a week and in March it was confirmed the hospital was on the market.

Mr O'Dowd yesterday stood by the Federal Government's measures to make private healthcare "simpler and more affordable".

He pointed to the government's delivery of the lowest premium change in 18 years - 3.25 per cent.

He said younger Australians would benefit from discounted hospital premiums of up to 10 per cent, and regional and rural residents would benefit from insurers who offered travel and accommodation subsidies to travel for treatment.

"Only the Morrison Government is committed to supporting the 13 million Australians that have taken out private health insurance," he said.

But the report warned subsidies and financial penalties to encourage people to take out private insurance were becoming "less effective".

"A new framework for private health insurance is needed urgently," it said.