Health fund premiums could rise by over 230 dollars a year

PRIVATE health fund premiums could skyrocket by an extra $230 a year as health ministers debate whether insurers should pay the full cost when their members use a public hospital bed.

Federal Health Minister Nicola Roxon says it's time to look at whether health funds should have to increase the amount they pay when their members use a public hospital bed.

Describing the amount health funds pay as  "contentious'', she said it was time to look at making sure "we are getting full value''.

Health funds currently pay just $310 a day when their members use a public hospital bed, that's a discount of up to $490 on the true cost of providing such a bed, a spokeswoman for NSW Health Minister Reba Meagher said.

But health funds claim if they had to pay the full cost for a bed it would drive up premiums.

It would be a double whammy for funds, which are already predicting premium rises will flow from a Budget measure to exempt people earning under $100,000 from a tax levy forcing them to take out cover.

This policy is expected to see 485,000 people drop their cover and put pressure on premiums.

The small amount paid by health funds for the public hospital beds has state health ministers complaining they are effectively subsidising health fund members.

Ms Roxon confirmed the issue had been raised by her state colleagues.

"To build a modern health system, we must get the balance between public and private health right,'' she said.

But Australian Health Insurance Association chief Dr Michael Armitage says if health funds had to pay the true cost of a public hospital bed it could add 5 per cent to members' premiums, or about $230 a year.