Health Minister Mark Butler has indicated he will not support above-inflation health insurance premium rises next year, warning insurers they will be asked to sharpen their pencils if they ask for increases that add to cost-of-living pressures for millions of Australians.

Mr Butler said on Friday he would take the same approach to insurance premium negotiations this year as he did last year when the government approved average premium rises of 3.03 per cent, about half of what the industry had asked for.