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Canberra Today 20°/24° | Friday, March 29, 2024 | Digital Edition | Crossword & Sudoku

Labor takes a scalpel to health insurance

LIKE a Robin Hood in reverse, the private health insurance scheme has been taking from the poor and giving to the rich.

But now means testing of private health insurance has just passed through the Parliament and the package of three Bills will mean a fairer distribution of taxpayers’ money, returning about $2.4 billion a year into the public coffers.

It has been a test of Labor’s resolve, and illustrates that minority government is still working.

The Fairer Private Health Insurance Incentives Bills 2011 package is cornerstone Labor legislation and provides a good indicator for the sort of differences that exist between the major parties.

Currently, anyone who takes out private health insurance receives a 30 per cent rebate from the Government on the premium. Effectively, our taxpayers’ money is used to make a significant contribution to everyone with private health insurance. What has been happening is that the poorest of taxpayers have been supplementing the wealthiest.

Australians generally pay their tax in a progressive system. Tax is levied proportionally to the money earned with those earning the more money in a higher bracket making a greater proportion as their contribution to the community.

The private health insurance levy was introduced under the Howard Government and it took a strong government, keen negotiation and considerable backbone for new Health Minister Tanya Plibersek to push this through.

Under the proposed scheme, singles with health insurance earning more than $80,000 and couples earning more than $160,000 would receive a rebate of 10 per cent to 20 per cent. Singles earning $124,000 and couples on $248,000 would no longer be eligible.

The Bill includes a penalty for higher income earners who don’t take out private health insurance – the Medicare levy surcharge.

The Opposition has painted a picture in the Parliament of a tsunami of people forgoing their private health insurance and overloading the public hospital system.

Price levers do have an impact on people’s decision making. However, there are many other factors. When the levy was introduced by the conservatives it was argued that it would increase uptake and take pressure off hospital waiting lists. Neither eventuated! There was no marked increase in new people joining private health insurance in the year it was introduced.

The sorts of services that are provided in private hospitals are often quite different to the services that public hospitals provide. The decision on which services are to be provided is based on profit. Most private hospitals offer a limited range of services and avoid procedures that require significant specialisation. In other words, there is a sense in which they cherry-pick the services they provide.

Perhaps this legislation will be a wake-up call for some of the private insurers. Dinner-table conversations in Canberra invariably reveal people who use their private health insurance and are shocked at the extent to which they have to reach into their own pocket for the gap payment.

In her introduction as Health Minister, Tanya Plibersek has demonstrated that she can lead reform in the way that her predecessor did on tobacco and alcohol. She has supported those earning $50,000 a year who will be no longer subsidising those earning $200,000 a year. That’s giving them a “fair go”.

Michael Moore was an independent member of the ACT Legislative Assembly (1989 to 2001) and was minister for health. He is the CEO of the Public Health Association of Australia.

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Thank you,

Ian Meikle, editor

Michael Moore

Michael Moore

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