Reforms to private health insurance announced in the federal Budget, including increasing the maximum age of dependents to 31 will make the system simpler and more affordable, Senator for Victoria Sarah Henderson said.
From April 1, 2021, the government will increase the maximum age of dependents under family private health insurance policies from 24 to 31 years.
For dependents with a disability, there will be no age limit.
"Many younger Australians will now have continuity of private health insurance care until age 31 when the Lifetime Health Cover requirements commences," Senator Henderson said.
"This will encourage younger Australians to continue with their own private healthcare policy, increasing the attractiveness and affordability of private health care to young people."
A snapshot of private health insurance uptake in Australia, published by the Australian Institute of Health and Welfare in August, revealed 44 per cent of the population had some form of private patient hospital cover, while 53 per cent had a form of general treatment cover.
The proportion of the population covered, including a combined hospital and general treatment policy, was lowest for those aged 25 to 29 years, where just 26 per cent of females were covered and 21 per cent of males were covered.
Since April 1, 2019, insurers were able to offer up to 10 per cent discount on premiums for people aged 18 to 25 and similar discounts to those aged 26 to 29.
Bendigo MP Lisa Chesters said young Australians don't see private health insurance as worthwhile.
"This is the government's attempt to reverse young Australians pulling out of private health insurance," Ms Chesters said.
"They don't see the point of paying higher premiums for a product they find expensive to access."
Ms Chesters said the industry needs to be thoroughly reviewed and believes the product is not value for money.
"The cost of enormous gap fees is an issue that is constantly raised with me," she said.
Minister for Health Greg Hunt said a Budget commitment of $17.1 million to enhance the Medical Cost Finder website is a further boost to transparency of out-of-pocket fees.
Australia's peak private health insurance body, Private Healthcare Australia, said the balance of private and public health system has never been more important as pressure mounts on the public system amid the COVID-19 pandemic.
"The Budget includes important steps towards addressing the value of private health insurance and the industry will continue to work with the government to address the changes necessary to ensure the affordability of private health, especially for young Australians," PHA chief executive Dr Rachel David said.