Rebate Indexation Increases Public Health Sector Costs

11 Jun 2013Media Releases

Government legislation to index the Private Health Insurance Rebate to the CPI will result in a decline in membership, higher premiums and an immediate in increase in public hospital pressure and costs.

As part of its submission to the Senate Community Affairs Legislation Committee into the Private Health Insurance Legislation Amendments (Base Premium) Bill 2013, Private Healthcare Australia released a Port Jackson Partners Report which states that indexation will lead “to an immediate net increase in public sector costs as public hospital costs exceed rebate savings”.

The Report says the number of insured persons plateaus immediately and starts to decline a few years after the Rebate is indexed.

“Indexation could see the number of private hospital insured people fall by 2.6 million people by 2022, translating to a cumulative revenue loss of $40b over the same period…Under indexation of the Rebate the per cent of population covered would be 10% less by 2022.”

Private Healthcare Australia Chief Executive, Dr Michael Armitage said the legislation continued the dismantling by the Government of the successful private health policy settings implemented by the previous Government.

“The introduction of the Medicare Levy Surcharge, Lifetime Health Cover and the 30% Rebate all contributed to the reversal in the long term decline of private health insurance membership.

“All three policy settings have been altered by this Government in recent years and these changes all work to undermine consumer confidence in private health”.

Dr Armitage said a number of Funds including the Government’s own fund were reporting “an increased amount of sell down” as people who prepaid their policies last year to retain the government rebate faced prices rises of 40 percent or more. (SMH 8 June 2013, page 4)

“This legislation represents poor public health policy as its only purpose is to allow the Government to cost-shift towards those individuals who hold private health insurance”.

Contact: Jen Eddy 02 62021000