Labor has given private health insurers a reprieve from regulatory intervention that would force them to increase hospital funding, arguing funds have voluntarily provided as much as $350 million in extra payments to the sector in the past few months.

Health Minister Mark Butler said on Wednesday the benefits ratio – the percentage of insurers’ premiums paid to hospitals – was expected to reach 87 per cent in the current financial year, returning between $250 million and $350 million in extra funding to private hospitals.