Health Minister Sussan Ley is considering applications from private health insurers to hike their premiums 6 - 7 per cent, about four times the rate of inflation.

Member for Bendigo Lisa Chesters said above-inflation increases to premiums would hit the most vulnerable hardest.

“I think what it will do is make people pull out of private health insurance,” she said.

“That means more pressure on the public health system and more people seeking help through a public system that’s already struggling to deal with the pressures that have been placed on it by the government.”

Ms Chesters said the responsibility for arresting rocketing health insurance prices must fall with the government.

“Private insurers are just like any other for-profit business - they’re going to increase their prices as much as they can. It’s the role of government to (keep prices affordable),” she said.

Insurance premiums have experienced a cumulative increase of about 30 per cent in the past five years. The lowest increase in the past decade was 4.52 per cent in 2007. The proposed increases would add $300 a year to family health costs at a time when insurers are making record profits.

Australian Medical Association president Brian Owler said funds shouldn’t be allowed to continue to gouge health consumers. Dr Owler said funds needed to return to their core business of insuring for in-hospital services, not for ancillary or allied health services or unproven alternative therapies.

He acknowledged there needed to be a strong private health insurance sector.

"But we also need to make sure that they live up to their end of the bargain, that we don't see insurers gouging in terms of premiums and prices," he told ABC radio.

Leanne Wells, CEO of Consumers Health Forum of Australia, said many Australians were downgrading or dropping their cover because they were struggling to afford it.

"It's a slippery slope. They either go to the public system and put even more pressure on public hospital waiting lists (which) is one of the very problems that the private health insurance rebate was proposed to solve. Or they face greater out of pocket expenses to go privately, or they don't get any treatment at all,” she said.