The AMA says private medicine is “under siege” from “junk” healthcare policies.

The Australian Medical Association (AMA) says a growing number of policies do not cover treatment for many illnesses, and are ripping people off.

“We've a proliferation of junk policies which are worth nothing more than the paper they're written on, and are purely designed so people avoid the tax penalty,” AMA president Michael Gannon said.

He wants laws to be changed so that all policies contain a minimum level of cover.

“The Government has the power to legislate — to make sure that [the policies] are worthwhile for people who take them out.”

The doctors’ lobby wants to streamline thousands of private health insurance policies into simple gold, silver and bronze categories.

The simplification plans have been presented to a Government advisory committee that should report back this year.

Dr Gannon says change is needed now.

“Private medicine is under siege and, in many ways, that's because, very quickly, the community is losing faith with their private health insurance, which underpins most visits to private hospitals,” he said.

“And we seem to be seeing an orchestrated campaign by the insurers — an industry which is increasingly a for-profit industry — to deflect the blame from the real problems.

“And the real problems are that patients are getting sick and tired of finding out when they're sick that their insurance isn't good enough.

“There are people who have carefully, dutifully, responsibly put aside money for private health insurance, over many years in many cases, and then when they get sick they find they're not covered.

“Policies for people over the age of 60 that exclude them from having their hips or knees fixed, or having their eyes fixed, are silly.

“Policies that literally will enable a single man to access maternity care, but exclude him from something else he might need are again so ridiculous, it would be funny if it wasn't so serious.”

Private Healthcare Australia chief Dr Rachel David said policies are not intentionally designed to confuse.

“Taking a step back, we need to understand what's underlying this, and that is that overwhelmingly consumers are concerned about the affordability of private health insurance,” Dr David said.

“And the reason that there has been an increase in the number of products where some treatment areas are excluded is because consumers have been offering more bespoke products or products that are tailored to their life stage.”

Dr David is a member of the Government's advisory committee, and warned that legislative amendments could do more harm than good.

“The last thing we want is for the whole private sector to be tied up in so much red tape that that in itself pushes health fund premiums up,” Dr David said.

“There are some things to make it easier for consumers to choose and use health insurance that are being looked at that will require regulatory change.

“It's not going to be major, but the health insurance industry at least is committed to doing the right thing by consumers and their members.”