Chris' response to the private health rebate debate

February 15, 2012

So the Independents have sided with the Labor government to dismantle the private health levy, established by the Howard government.
Think of the private health contribution as a pool. The member puts in 70% and the government contributes 30%. So the government removes their 30 cents in the dollar from members whose income is above a target figure. Smart move? It is until the member cancels their private health membership and takes their 70 cents out as well! I don’t think so. The pool dries up.
So what happens? Increased pressure on an already overstretched public health system.
 
Consider these facts:
 
·         The private hospital system in this country treats 40 per cent of all patients, being over three million annually, and performs over 60 per cent of all surgery in Australia each year, on over a million patients.
·         The Productivity Commission found that private hospitals treat patients more cheaply and safely than public hospitals in this country.
·         The government spent $30.8 billion on public hospital services in 2007-08. By contrast, the government spent $1.7 billion on private hospitals through private health insurance levies.
·         With an ageing population, the demand for hospital admissions will double by 2030.
 
Why would the government legislate to discourage participation in private health cover? Why did the Labor Party commit to continuing the rebate for private health to Australians prior to the 2007 election? Yet another lie to retain government? Yet another concession to the Greens political party?
 
In her spin to sell the removal of the private health levy, Health Minister Plibersek demonises higher income earners who, she claims, should not receive subsidies in their private health insurance fees.
 
The minister conveniently forgot to outline that these same people pay a Medicare levy of 1.5% of their taxable income to support the public health system. This is on top of their normal income tax burden. Neither did she explain that higher income earner also pay a further 1% Medicare levy surcharge if they FAIL to take out private health cover.
 
A single person whose taxable income + superannuation + fringe benefit totals $80,000 per annum and chooses to not take out private health cover will pay $2000 per annum towards Medicare. If this person already has private health, they will pay $1200 p.a. Medicare levy. Now the 30% levy on private health insurance will be removed.
 
There goes the incentive for young people to remain in or join private health insurance.
 
So why will private health insurance go up for older, retired and low income earners in our community? Because the pool of funds will be reduced as young people and high income earners either leave the funds or reduce their levels of membership. It is simple.
 
At a time we should be encouraging people to take responsibility for their own health cover, it is hardly prudent to be driving the very people who fund the health system away from private health cover.