Health Minister Nicola Roxon announced that private health insurance premiums will go up by an average of 6.02% on April 1. She said she had written to several large funds in this regards and had challenged their request for larger premium rises.

"Without that close scrutiny, premium rises would have been higher for up to eight million Australians," she said.

"This year's increase is the result of increased benefits paid to patients, rising health service costs, and investment losses from the global financial crisis."

The Federal Government had changed the income threshold for the Medicare levy surcharge, and this, insurers had warned could result in a rise in premiums. A year of bad investments leading to balance sheet losses for the health insurers has not helped the situation either.

In comparison in 2008 under the Rudd Government there was a rise of 4.99 % in the premiums and an average rise of 6.63 % over the last five years of the Howard Government.

Under the changes by Labor, uninsured singles can earn $70,000 a year and couples $140,000 before being forced to pay the 1 per cent surcharge. The Treasury estimated that as a result of the new legislation, 492,000 people would drop their private health cover.

The fear of a mass exodus from private health insurance was put to rest as an additional 54,000 Australian took out private health cover in the December 2008 quarter.

Acknowledging that the rise would put pressure on many working families Ms Roxon said, "This will put pressure on many working families but they can be confident the government has done absolutely everything in its power to ensure that these increases were kept to a minimum."

Access Economics had predicted that premiums would rise by 10 % a year and figures released by the Private Health Insurance Administration Council in February diluted this argument.

"It has defied predictions of increases of 10, 11 and 12 per cent by the opposition and the industry themselves, so I think that will provide some relief to the community that they will not be facing increases of that scale."

Medibank Private and MBF, the two largest funds lifted premiums by an average of 5.74 % and 5.98 % respectively.