Doctors and health groups have thrown their support behind a Greens plan to get rid of government-funded private health insurance rebates.
The rebate costs taxpayers $6 billion each year, and the Greens want that money injected into the public hospital system instead, labelling the rebate "unfair, inflationary and inefficient".
The Public Health Association said it was time the prime minister took another look at how that money could be better spent because the costs of the rebate far outweigh the benefits.
"This is effectively Robin Hood in reverse - taking from the poor and giving to the rich," the association's chief executive Michael Moore said.
"Australians have the right to equitable health care and this cannot be achieved by pouring money into the private health system."
Greens leader Richard Di Natale says figures from the Parliamentary Budget Office show the federal government could save as much as $10 billion over the next four years by dumping the private health insurance rebate.
It comes as state premiers and territory chief ministers begin arriving in Canberra to discuss how to prevent a looming hospital funding black hole.
Prime Minister Malcolm Turnbull will propose keeping activity-based funding and a national efficient price - the hospital funding model established under the former Labor government - reportedly offering the states $5 billion over four years.
The Abbott government's first budget sought to scrap that model from July 2017, with hospital funding to then be based on the inflation rate and population growth - an arrangement states and health professionals argue is unsustainable.
States and territories would then be allowed to raise income tax to fund hospitals themselves, under the proposal being put to leaders on Friday.
Senator Di Natale said the private health insurance rebate was a public policy disaster that had completely failed to achieve its stated objective of easing pressure on public hospitals.
He accused the government of trying to dump the public hospital funding crisis on states and territories in a "desperate act of political cowardice".
The Doctors Reform Society said the system was grossly unfair and needed to change.
Under the coalition government, the Medicare rebate was frozen, the public dental scheme underfunded and public hospitals left to struggle while billions are paid to the inefficient profit-driven private health insurance industry, they said.
"Whilst it is encouraging to see the new prime minister talking about a tiny bit of extra money for the states to run public hospitals, the policies of underfunding the public system remain firmly in place," the group's Dr Tim Woodruff said.
Health Minister Sussan Ley rejected the idea.
"By encouraging people to invest in the cost of their own health in a private hospital, we take pressure off the public hospital system," she told ABC TV.
