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Ditch wasteful private health rebate: Di Natale

ABC

ABC

Dumping the private health insurance rebate could save the Federal Government as much as $10 billion over the next four years, new figures from the Parliamentary Budget Office (PBO) show.

Greens leader Dr Richard Di Natale, who requested the analysis, said the cost of the rebate had blown out but had done little to reduce pressure on public hospitals.

“Phasing out the wasteful private health insurance rebate would free up $10 billion in the next four years and tens of billions in the next decade, to be reinvested in health and hospitals,” he said.

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“People can still choose private health insurance for themselves and their families if they wish to do so, but public money has to be spent where it’s most needed and gets the best results, and that’s the public system.”

Senator Di Natale said investing the rebate money back into the public health system would take the pressure off hospital waiting lists, reduce waiting times in emergency departments and help fund public dental care.

He told Lateline the current private health insurance rebate scheme was simply not working.

“This is worth close to $6 billion a year now and it’s not achieving anything in terms of the promise that was made, which was that it would take the pressure off the public hospital system,” Senator Di Natale said.

“What happens, instead, is that people with private health insurance still opt to use the public system, they’re given a whole range of ancillary benefits, a whole range of therapies, some of which are of questionable benefit, funded by the taxpayer.

“And then you have these incentives created which mean you’ve got these junk policies that do nothing except allow people to avoid paying the Medicare surcharge levy.”

Other groups including the Australian Council on Social Services (ACOSS) also remain opposed to the rebate.

CEO Cassandra Goldie argued the rebate benefitted people on higher incomes who could afford insurance cover.

“The private health insurance rebate has been a significant factor in driving up costs without any evident gain in achieving its initial policy intent,” she said.

The Grattan Institute’s health program director Professor Stephen Duckett told Lateline “there is great merit in the proposal” but it may not provide enough impact.

“It’s taking money from one part of the health system and putting it in another part of the health system and it’s doing it in a way that, I think, is not going to impact greatly on the take-up of health insurance in this country,” Professor Duckett said.

“I think there are issues with the details of the Greens proposal such as, do you really need to put in 50 per cent, rather than 45 per cent, but I think on the whole it’s absolutely in the right direction.”

The 30 per cent rebate on premiums was introduced in 1999 by the Howard government to encourage consumers to take out private cover instead of using the overloaded public health system.

The new PBO analysis found removing the rebate would lead to a decrease in private health insurance, with higher income policy holders more likely to maintain their insurance than those on low incomes.

There has been some speculation the Government may consider dropping the rebate but the ABC understands the Government remains committed to keeping it.

Private health under review

In October 2015, Health Minister Sussan Ley commissioned a review of private health insurance, with “opportunities to amend unnecessary and inefficient regulation which add costs for the consumer”.

It also aimed to identify reform options which would enhance the inherent value proposition of private health insurance to consumers.

Ms Ley said a public consultation on private health insurance policies received 40,000 submissions with many complaints, particularly about so-called “junk policies”.

Half a million Australians dropped or downgraded their private health insurance in the last financial year.

The consultation phase of the private health insurance review has ended.

It is expected the Health Department will report back to Government in the next few months.

ABC

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