Some Australians are having to pay as much as 70 per cent on top of their health insurance premiums because they've delayed taking out hospital cover long after their 31st birthday.

And more Australians are at risk of being slugged the lifetime health cover loading (LHC), with new figures showing that 43 per cent have no clue what it is and, therefore, how to avoid it.

Under the Private Health Insurance Act, insurers are allowed to add a 2 per cent loading on top of premiums for each year the member was without hospital cover after turning 31. The loading lasts for 10 years and is capped at 70 per cent.

A survey of more than 2000 Australians shows only 14 per cent knew the loading goes straight to the health funds' bottom line. The rest thought it went to the Australian Taxation Office, was split between the insurers and the Tax Office, or had no idea.

"If we look at the average policy, which is around $4000 a year, that person with LHC applied would be paying nearly $4800 if they took out a policy for the first time at 41," said Finder's Bessie Hassan.

The Howard government introduced LHC - alongside the Medicare levy surcharge and then 30 per cent rebate - to pump the system with young and healthy people and lower premiums for everyone.

The industry's peak body Private Healthcare Australia (PHA) says the impact has diminished and is seeking the government's permission to introduce a "reverse" LHC - a lifetime health cover discount to those who buy hospital cover between 18 and 30 years.

The discount would increase by 2 per cent each year for those under 30 and be capped at 10 per cent.

"Younger individuals have on average a much higher gross margin [so] adding an additional 150,000 members could be expected to bring in up to $130 million in total gross margin [of which] 90 per cent could be expected to be passed on to existing policyholders in the form of lower premiums," the PHA said in its pre-budget submission.

Under its plans, the reverse LHC could begin by late 2018.

The number of policyholders subject to the loading hit a peak of 1.2 millon in mid-2015 before falling for the first time. At present, 1.1 million people are paying the loading.

Rachel David, chief executive of PHA, said the decline reflected affordability pressures.

"Particularly in the 30 to 55 cohort - there is pent-up demand in this age bracket and many people feel they are locked out of PHI by the cost," she said.

Market leader Medibank wants the government to take a more extreme step and drop the LHC starting age to 25, saying this would "lower the overall risk of the covered pool, leading to estimated savings for consumers of $110 million [and] improve affordability".

Ian McAuley, a fellow of the Centre for Policy Development, slammed the proposal as "morally reprehensible", saying it would further burden young adults struggling with high house prices and university debts.

"Policyholders aged between 30 and 55 already subsidise older people generously. LHC is already grossly unfair on people struggling to buy a house and bring up children," he said.

"The industry's proposal shows just how little community responsibility these bloated financial intermediaries have."

Gerard Fogarty, chief executive of Defence Health, said 1 per cent of its membership was subject to a loading of 60 to 70 per cent, and only 10 per cent had some form of it.

"The bigger issue is that people in the early 30s aren't thinking about the loading they may have to pay in the future, but about the affordability here and now," he said.

"They're saying: 'Don't talk to me about paying extra later, because I can't afford it today'."

Comparison website iSelect said 24 per cent of customers taking out family policies have an LHC applied. It says the average loading is 18.8 per cent.

The latest Australian Prudential Regulation Authority data shows that in 2016, more than 117,000 people had their loading removed after paying it for 10 years.

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