Australian Federal government hits private health insurance

Private health insurance is an expensive item and this rise could well push some people out of the system -- particularly if they have large families. Pushing yet more people into the already overworked public system will hit the poor most of all

ABOUT 2.4 million wealthy Australians will pay up to $1000 a year more for health cover from July after Labor rescued its private health rebate reform, which delivers half of its projected budget surplus next year.

The government's means test on the 30 per cent private health insurance rebate is expected to receive parliamentary approval next week. Greens MP Adam Bandt backs it, Tasmanian independent MP Andrew Wilkie is "inclined to support it" and regional crossbencher Rob Oakeshott is understood to be supporting the measure.

The policy change will raise $746.3m in 2012-13, and is crucial to the government's bid to achieve its $1.5 billion surplus.

Passage of the measure through parliament three years after it was first proposed - and after it was twice rejected - will mark a significant victory for the government

The private health rebate means test is a key plank in Labor's drive to clamp down on middle-class welfare that has also disqualified families earning $150,000 or more from the Baby Bonus and Family Tax Benefit Part B and frozen the indexation of family welfare payments until 2014.

Victorian Health Minister David Davis and health funds yesterday warned that the measure would force tens of thousands of people to drop their health cover and many more to reduce their cover, increasing the pressure on the public hospital system. And the opposition warned that it could force some doctors to withdraw their services from rural communities.

The means test would push up the price of health insurance for families earning more than $166,000 and singles on more than $83,000 a year by between $315 and $935 a year.

Families earning more than $258,000 a year and individuals more than $129,000 a year would lose the rebate entirely.

The government is still battling to win Greens support for an element of the legislation that will increase the tax penalty that applies to wealthy people who do not have private health cover.

Greens leader Bob Brown yesterday said his party would "concede" and support a rise in the Medicare levy surcharge if the government put the $80m a year it raised directly into a public dental scheme.

However, Health Minister Tanya Plibersek said she would not be "reading the newspapers one day and making a policy announcement about dental the next just because the Greens ask it".

Senator Brown confirmed his party would support the means test yesterday; Mr Oakeshott declined to comment; and Mr Wilkie said: "I can say that I am inclined to support it."

The government says three out of four, or 7.7 million, health fund members will be unaffected by the change and it predicts that only 27,000 will drop their health cover when their subsidy is reduced or abolished.

"It's important to remember that most people will not lose the subsidy entirely; as their incomes increase, the subsidy will decrease," Ms Plibersek said.

Health insurers have predicted 1.6 million health fund members would quit their health cover over the next five years if the means test goes ahead.

Mr Davis told state parliament yesterday if tens of thousands of Victorians dropped or reduced their cover because of the means test, "there would be a significant impact on the public health system".

"That would necessarily put greater pressure on the public health system, emergency departments, elective surgery lists and so forth," Mr Davis said.

Australian Medical Association chief Steve Hambleton said if the means test increased the pressure on public hospitals, the federal government should have to top up public hospital funding.

Opposition health spokesman Peter Dutton said many Australians would face higher premiums as a result of the means test and younger and healthier people might quit their cover, pushing up premiums for everyone else. "Half the nation has private health insurance and if you drive people out of private health insurance on to the public system that's already overstretched, we'll just get bad health outcomes."

Private Healthcare Australia chief Michael Armitage said he would not stop lobbying MPs to stop the means test until a vote was taken.

"My experience is until the vote is counted, no one can count on any vote," he said.


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