Australian health insurers are being urged to deliver better value for money after making huge profits during the pandemic, as well as increasing spending on executives' salaries.

A report from the Australian Medical Association found some insurers were paying about 15 per cent of their premium income to management expenses, significantly more than the industry average of 11.7 per cent.

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Insurers' profits jumped due to cancelled elective surgeries and a rise in the number of Australians with hospital cover, according to the peak body for doctors.

About 235,000 additional people signed up for health cover since June 2021, meaning 45.2 per cent of the population now have insurance.

The report found some insurers would not pay out as much as others, with the difference as high as $700 for some surgeries performed at the same hospital.
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The differences extended across many areas including births, with an uncomplicated delivery seeing some women pay a difference of about $500.

The AMA wants an independent regulator to oversee private health insurance so that patients get value for money.

"We want to see the money that patients pay in premiums fund their health care ... not increased profits for insurers," Australian Medical Association President Professor Stephen Robson said in a statement.

"When management expenses are gobbling up premiums, there is less money for members' claims for hospital treatments."

"Fund members want to see a fair return on their premiums and high management expenses is a marker of a low value health insurance product."

Health funds returned more than $2 billion to members during the pandemic, despite medical specialist out-of-pocket costs increasing by almost 10 per cent at the same time, peak industry body Private Healthcare Australia chief executive Rachel David said.

"Reducing wasteful healthcare and overcharging will help premiums (be) affordable for Australian families," Dr David said.

"(Private health insurance) returns on average 86 cents in the premium dollar to members, higher than all other forms of insurance."

Information about what health funds covered and the benefits they payed for procedures was publicly available, Dr David said.

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