The number of young people taking out private health insurance for hospital treatment plummeted by almost 7 per cent in 2018, in a continuation of the health fund exodus that has been called a "death spiral" for the industry.

Figures released by the the Australian Prudential Regulation Authority on Thursday showed the percentage of 20-29 year olds with private cover fell 6.9 per cent over the 12 months to December 2018. That represented 33,975 fewer people in the age cohort with hospital cover.