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Australia's peak professional body for doctors is throwing its weight behind plans to outlaw a sneaky price-gouging tactic used by private health insurers. The federal government plans to close the loophole, known as phoenixing, that enables health insurers to scrap policies only to relaunch them under a new name and hit customers with large increases in premiums. Today, the Australian Medical Association (AMA) backed a proposal that would force insurers to use only the annual, government-regulated process to change prices of new products, unless in exceptional circumstances. READ MORE: Days left to lodge tax return and dodge $330 monthly penalties "Private health insurance premiums have outpaced wages and inflation in recent years, all while insurers' management expenses and profits continue to soar," AMA president Danielle McMullen said. "The widespread practice of phoenixing is a major factor in consumers struggling to access the level of cover that meets their needs, and it is eroding public confidence in the private health system. "Private hospitals play a vital role, especially as more Australians seek care outside the overwhelmed public sector. "But unacceptable conduct from insurers threatens the integrity of our entire healthcare landscape." The AMA insists those "exceptional circumstances" must be clearly defined in legislation to prevent any possibility of insurers finding loopholes. Health Minister Mark Butler late last year described phoenixing as an "underhanded" and "sneaky" practice. READ MORE: Two dead after mine explosion in far west NSW While the practice wasn't illegal, Butler said it was "clearly against the spirit of the law". His comments came after consumer group Choice reported on the practice last February and found some insurers had increased prices by up to 47 per cent over three years. The AMA is also calling for serious penalties to apply for insurers that continue phoenixing once changes in legislation are rolled out. "There are just a few insurers that dominate the market in Australia, and given their extraordinary financial resources and profitability, severe penalties must be in place to deter illegal behaviour," McMullen said. DOWNLOAD THE 9NEWS APP: Stay across all the latest in breaking news, sport, politics and the weather via our news app and get notifications sent straight to your smartphone. Available on the Apple App Store and Google Play.
