ABC Radio Canberra AM program interview with Dr Rachel David regarding proposal for employers to be given tax breaks if they pay for health cover

Station: ABC Radio Canberra
Program: AM
Date: 4/10/2019
Time: 8:10 AM
Compere: Kim Landers
Interviewees: Dr Rachel David, CEO, Private Healthcare Australia; Mark Fitzgibbon, CEO, nib; Dr Stephen Duckett, Health Program Director, Grattan Institute


SABRA LANE: The peak private health insurance lobby wants employers to be given tax breaks if they pay for your health cover. It’s part of a suite of proposals from the sector designed to encourage young people to take up insurance. But the proposal comes at a cost to taxpayers, an estimated $1.2 billion. Julia Holman reports.
REPORTER: Younger Australians are abandoning private health insurance or not taking it up at all. That’s a big problem according to Dr Rachel David who’s the CEO of Private Healthcare Australia and she says one of the ways to make the product more attractive would be to offer tax breaks for companies that pay for their staff’s private health insurance.
RACHEL DAVID: This involves employers getting involved and we’ve asked for an FBT tax exemption for people aged under 40 as part of the package.
REPORTER: She says it’s common in other countries for employers to provide private health cover.
RACHEL DAVID: A lot of global employees, particularly large US multinational companies do because they have a tradition of it. But it’s not been the case in Australia up until now because local companies would be forced to have quite a high tax penalty, which would actually eliminate the benefits of doing that if they were to take that path.
REPORTER: Private Healthcare Australia has put together a suite of ideas which they’re presenting to the Federal Government, which also includes lifting the private health insurance rebate to 30 per cent for people under 40. Rachel David says the estimated cost of their proposal is $1.2 billion over five years.
RACHEL DAVID: Bear in mind, that if private health insurance participation should continue to deteriorate, the cost to Government to continue to expand public hospitals is very, very significant and far more than the amount of money that we’re actually arguing for.
REPORTER: Mark Fitzgibbon who’s the head of health insurer NIB says employers would be keen to provide their staff with insurance if they were given a tax incentive to do so.
MARK FITZGIBBON: Employers are taking an increasing interest in employee workplace health and safety and providing them with health insurance cover is part of that paradigm. And we know it would be effective in attracting a better risk cohort, more younger people because the average age of people who join through their employer is typically around 30, compared to the overall population average of more than 40.
REPORTER: Dr Stephen Duckett is the Director of the health program at the Grattan Institute. He argues that private health insurance shouldn’t be subsidised any further by Government and taxpayers.
STEPHEN DUCKETT: Already, the subsidy for private health care is running at about $9 billion a year. This proposal is for an extra billion dollars of subsidy. And I think we’ve just go to say – well hang on, why aren’t you looking after your own business?
REPORTER: He says the Government should instead push private health insurance to make their cover more affordable.
STEPHEN DUCKETT: What the Government needs to be doing is saying back to the industry, it’s your job to fix this problem. And one of the ways that the problem needs to be fixed is the cost structures. Private hospital costs are increasing very rapidly; private hospital lengths of stay are longer than public hospital lengths of stay. We need to improve the efficiency of private care so that we can drive premiums down to keep people in private health insurance.
REPORTER: AM has contacted the office of the Health Minister Greg Hunt for comment.
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