A nine-point plan to overhaul the health insurance industry is a ‘good start’, but more must be done to make sure insurance products serve the needs of customers, the Australian Medical Association has said.

In particular, the doctors’ peak body said the success of the reforms would depend upon the “genuine commitment and cooperation” of insurance companies.

The reforms, announced by Health Minister Greg Hunt on Friday, aim to make private health “simpler and more affordable”.

The “major reforms” include a 10 per cent discount on premiums for young people, readier access to mental health cover, and more appropriate cover for people in rural areas.

They also aim to make products easier to understand, with a certified policy grading system and a more thorough government-run comparison website.

They ban the cover of scientifically unverified treatments such as homeopathy, reflexology, and Rolfing massage, and grant new powers to the Private Health Insurance Ombudsman.

AMA president Dr Michael Gannon welcomed the reforms, saying they provided “much-needed transparency, clarity, and affordability to the private health sector”, but he said significant challenges remained.

“The challenge now is to clearly define and describe the insurance products on offer so that families and individuals – many of whom are facing considerable cost of living and housing affordability pressures – have the confidence that their investment in private health delivers the cover they are promised and expect when they are sick or injured.”

He paid particular attention to so-called “junk policies” – that is, insurance products that offer only very limited cover.

“While we had called for the banning of so-called junk policies, we will watch closely to ensure that any junk policies that remain on the market are clearly described so that people know exactly what they are buying and are not subject to unexpected shocks of non-coverage for certain events or conditions,” Dr Gannon said.

According to consumer advocate group CHOICE, junk policies are a growing problem.

The AMA also said more scrutiny was needed of policy elements that leave consumers with substandard cover. These included “the caveats, carve-outs, and exclusions”; hospital costs; and “inconsistent and tricky product definitions”, Dr Gannon said.

He added: “And we will be vigilant on any moves to deny private patients access to care in a public hospital. This is a critical and complex area that needs careful consideration. It is especially critical if the Government is going to promote basic and public hospital only cover.”

Private Healthcare Australia, the peak body representing health insurance companies, said the reforms would deliver “value to Australians young and old”.

PHA Chief Executive Dr Rachel David said: “Today’s announcement is a major step in ensuring the sustainability of Australia’s highly regarded mixed private-public health system, by improving the value proposition for people at all stages of life.

“Eighty-four per cent of Australians with private health insurance value the product and want to keep it, however their main concern is affordability.”

She said of the 13.5 million Australians with private health insurance, “almost half of them” had an annual income of less than $50,000.