Private health insurers are in a “death spiral” and  a minority of “greedy” specialists are to blame, claims a new report by the Grattan Institute.

Written by Dr Stephen Duckett (PhD), a former federal health department secretary, the report has already caused a huge stir with its demands for a radical rethink on how specialists and private hospitals charge patients for their care.

The report lists three main forces pulling the industry downwards towards its fatal collision with financial reality, despite the $6 billion that taxpayers fork out each year to keep it airborne.

The first, somewhat unsurprisingly, is the cash being paid out in benefits for an increasing number of hospital admissions experienced by its decreasing number of members. This is partly to do with an ageing population, and partly to do with the shortage of young health policy holders willing to cough up the premiums being levied.