A Fair-Go for Taxpayers: Private Health Insurance Rebate Changes Introduced
A more equitable and sustainable private health insurance rebate will be delivered as the Australian Government introduces new legislation into the Parliament that will ensure low and middle income Australians are not paying for the private health insurance of millionaires.
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7 July 2011
A more equitable and sustainable private health insurance rebate will be delivered as the Gillard Government introduces new legislation into the Parliament that will ensure low and middle income Australians are not paying for the private health insurance of millionaires.
“The private health insurance rebate, as it is currently structured, is fundamentally unfair,” Minister for Health and Ageing Nicola Roxon said.
“Australians on higher incomes are benefiting from the rebate at twice their population share. This means that teachers, secretaries and cleaners are effectively paying for the private health insurance of lawyers, MPs and executives.
“This is simply not a fair distribution of taxpayers’ money.
“Combine this unfair model with the fact that, without reform, the rebate will be the fastest growing component of Government health expenditure, we simply must act now.
“For too long Tony Abbott has stubbornly opposed this reform and has refused to acknowledge the rebate is not targeted at those who need it most. Without change, the rebate will continue to starve the health system of much-needed new investments over the long term.
“Our changes will see $100 billion saved over the next forty years—that’s $100 billion that can be better invested across the health portfolio.
“Tony Abbott needs to stop standing up for his millionaire mates, and start advocating for low and middle income Australians who most need this rebate.”
Under the changes, only families earning a quarter of a million dollars or more will lose the rebate entirely and nearly 8 million policy holders won’t see any difference at all.
The Government's modelling has consistently shown that the changes to the rebate will not have a significant negative effect upon private health insurance coverage, premiums, or demand on public hospitals.
The Government’s modelling shows that 99.7% people will keep hospital cover with only 27,000 dropping hospital cover.
For more information, contact Ms Roxon’s Office: (02) 6277 7220
Media note – Private Health Insurance Rebate Changes
The proposed legislation will introduce means testing for the private health insurance rebate, and increase the Medicare levy surcharge for people on higher incomes who do not hold appropriate private hospital cover.
Through the introduction of three new ‘Private Health Insurance Incentive Tiers’ for people on different incomes, the Government is seeking to better balance the mix of incentives for people to take out private health insurance – so that people who have more capacity to pay for their private health insurance do so.
Once implemented, the proposed private health insurance tiers will operate in accordance with the following thresholds.
The legislation is planned to take effect from 1 January 2012 and will generate a $2.8 billion saving for the Budget over the forward estimates.
The Incentive Tiers thresholds for 2011-12 will be:
At 1/7/11
 | Unchanged | Tier 1 | Tier 2 | Tier 3 |
Singles | $80,000 or less | $80,001–93,000 | $93,001-124,000 | $124,001 or more |
Families | $160,000 or less | $160,001-186,000 | $186,001-248,000 | $248,001 or more |
Rebate | ||||
Under 65 | 30% | 20% | 10% | 0% |
65-69 | 35% | 25% | 15% | 0% |
Over 70 | 40% | 30% | 20% | 0% |
Surcharge | ||||
All ages | 0.0% | 1.0% | 1.25% | 1.5% |
*Family thresholds increase by $1,500 per child after the first. These thresholds are indexed annually to Average Weekly Ordinary Time Earnings.
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