Private Health Insurance now more expensive for 12.5 million Australians

05 Jun 2013Media Releases

12.5 million Australians will pay more for their private health cover as a result of Government legislation which passed through the House of Representatives late last night.

Changes to the indexation of the Rebate on Private Health Insurance and the removal of the Rebate from the Lifetime Health Cover component of a premium will both adversely affect those with private cover.

“Privately-insured Australians will be disappointed to learn that the Coalition supported the Labor Government to pass the Rebate Indexation legislation,” said PHA Chief Executive, Dr Michael Armitage.

“The Coalition’s position was unexpected given it was the Howard Government which introduced the Rebate, as an acknowledgement of people who take responsibility for their own health care needs”.

This legislation will affect all of the 12.5 million Australians who have taken out private health cover, particularly those on lower-incomes including:

1. those 3.4 million people with private health insurance who live in households with an annual income of less than $35,000; and
2. those 5.6 million Australians with private cover who live in households with an annual income of less than $50,000 (source: ATO and ABS).

Rebate Indexation will have a severe impact on the Private Health Insurance Industry and even the Government’s Explanatory Memorandum states that this measure will force consumers to pay more out of their own pocket:

“This Bill may increase the cost of obtaining private health insurance for consumers who choose to purchase private health insurance.”

The passing of the second piece of Government legislation targeting PHI (Lifetime Health Cover) will directly affect 1.2 million Australians – approximately 14% of those with hospital cover.

“Private Health Funds estimate a direct increase in premiums (separate and in addition to the 1 April premium adjustment) as a result of this measure of up to 27% (average of 10%).

“These changes will have a long lasting, negative impact on Australia’s private and public healthcare systems,” said Dr Armitage.

Contact: Jen Eddy 02 62021000/0439240755