People with hospital insurance that does not offer full cover for mental health treatment will be able to upgrade their cover and access mental health services without a waiting period on a once-off basis.
Premiums have increased an average of 5.6 per cent a year since 2010, but Hunt wouldn't put a figure on how much that will fall.
Premium discounts will accrue by 2 percent for every year until a person turns 30, up to a maximum discount of 10 per cent.
"You're going to be having a lot of young people buying policies that are worth very little to them", CHOICE spokeswoman Erin Turner was quoted as saying in the New Daily.
Currently, the government has a 2% annual loading on premiums for anyone who fails to take out a premium after 30.
But the government will also end rebates on a range of complementary therapies popular with younger people, such as pilates, yoga, tai chi and naturopathy, following a review into the sector by the Department of Health earlier this year.
Insurers will have to re-categorise policies as either gold, silver, bronze or basic packages and provide a one-page summary to ensure "no surprises".
Modelling commissioned by the Private Health Insurance Ministerial Advisory Committee showed removing "basic" cover would increase premiums by between 15 and 21 per cent and result in more than 100,000 people dropping their cover.
Bupa health insurance managing director said Dr Dwayne Crombie said the changes will make private health insurance more appealing and affordable.
"We want to get the absolute lowest outcome".
Dr Crombie also praised the focus on mental health and the medal-style ratings system for policies.
"The mental health safety net is an important first step, but the work the minister has foreshadowed to reduce low-value day care admissions and other low value care is also critically important", he said.
Labor, however, welcomes the cut to the cost of devices on the prostheses list.
"That is why we are pleased to see next year's prostheses prices cut by $188 million", he said, estimating an average saving of around over $34 per policy.
Central to the problem faced by the government is that hospitals are charging two prices to patients - a lesser amount for public patients, while cross-subsidising the public system with higher charges for private patients.
The ABC believes the Government plans on generating savings of about $300 million a year through the measure, starting next year, with the money ploughed back in reducing premiums for customers.
Speaking on ABC radio's AM program today, Health Minister Greg Hunt said the changes were about making private health insurance "more affordable and easier to understandable" but he would not guarantee that premiums increases would reduce as a result of the government's changes.