Health Insurance: Hockey “Rules Out” Means-Testing on PHI Rebates in Future
Shadow Treasurer Joe Hockey, speaking in London after meeting Britain’s Chancellor of the Exchequer, George Osborne, caused a furor when he appeared to rule out means testing of private health insurance rebates by a future coalition government, reports ABC News.
Hockey, in a speech entitled “The End of the Age of Entitlement”, compared Australia’s economy with those of the country’s Asian neighbors, and emphasized the need to end the long-established practice of modelling Australia’s budgeting on struggling European welfare-state spending.
Hockey asserted that, although government-funded pensions and similar benefits would be means-tested “so that people who do not need them do not get them”, the same did not apply to private medical insurance rebates. He claimed that removing the rebates entirely would simply push more Australian citizens into the public health establishment, increasing the burden on the “entitlement system”.
“Sometimes governments actually have to spend money to reduce the overall cost to taxpayers of a universal entitlement,” he declared, pointing out that, in countries like Britain and France, nearly 30 per cent of GDP goes towards welfare costs, an expenditure level that is “crippling”.
In legislation that takes effect on 1 July 2012, better off Australians will find their private health insurance rebate reduced from its current level of 30 per cent as their earnings increase. People earning more than $129,000 as a single or more than $258,000 as a family or couple will see their rebate disappear completely.
A second blow to people’s pockets as a result of the July changes will be the introduction of increased levels of Medicare Levy Surcharge (MLS) for people who do not have private health insurance. Again, high earners will see their contribution go up from its present level of 1 per cent.
These changes have proved to be highly controversial with prolonged debate over the best course of action for the average Australian. Since, in practice, “the average Australian” doesn’t exist, this is an argument without a resolution – each party simply plays the facts to its own advantage.
Consumer groups have sought to play down the impact of the new arrangements, suggesting that those who can afford to do so should pay their insurance premium in full before 1 July. By so doing, people avoid the impact of the reduced levy for a further year, since the changes do not apply to payments actually made before the implementation date.
Health insurance providers are concerned that policy holders will choose not to renew when their cover expires. Many consumers see the cost of premiums, in the light of reduced rebates and an annual cost increase of around 5 per cent, as an expense that has become unaffordable. Switching providers may help in the short term. However this will only be a temporary fix if concerns on the part of insurers mean that premiums rise across the board.
It is likely that many Australians will continue to find the cash necessary to pay for what they see as a must-have expense, given the extended waiting times and lack of choice available from the publicly funded Medicare system. The unanswered question in many cases is “What can we do without in order to afford the increased costs?”
Speculation about further government action to tighten the country’s belt does nothing to reduce the level of unhappiness within the electorate. Any future government will undoubtedly inherit this hot potato of an issue whenever it takes office.