AUSTRALIA 
New threshold splits health providers
Sunday, 11 May, 2008
The private health sector is divided over whether lifting the threshold for the Medicare levy surcharge will encourage cash-strapped families to drop their private health insurance.
The federal government, in Tuesday's budget, plans to raise the threshold at which the surcharge comes into effect.
Currently, individuals earning more $50,000 and couples making more than $100,000 pay the additional Medicare levy if they don't have private health cover.
Under the government's changes, those thresholds will rise to $100,000 for individuals and $150,000 for couples.
The surcharge was introduced by the Howard government in 1997 to encourage people to take out private health insurance.
Private health funds believe up to 400,000 people may give up their health insurance and the cost of premiums would go up for remaining members if the government raises the threshold.
But the Australian Private Hospitals Association (APHA) disagrees.
APHA executive director Michael Roff says he believes the community will see that access to quality care in the private sector outweighs the small financial benefit of dropping the cost of health insurance.
"Australians understand the value of choice, quality and fast access provided by the private health sector," he said.
"We believe that despite the changes announced in the budget, when people sit down and evaluate the value proposition, they will decide the benefits provided by private health care outweigh any small financial saving that may accrue.
"That is why we have seen health insurance membership growing strongly in the past few years."
The Australian Health Insurance Association says its research - conducted last year - shows that two per cent of health fund members, about 200,000 of the 10 million members - would drop out if the surcharge threshold was lifted from $50,000 to $75,000.
The Doctors' Reform Society accused health funds of acting out of a vested interest.
"They ... have a vested interest in taxpayer support for the private health system, which has been helping to tear the heart out of the public health system for a decade," president Tim Woodruff said.
Opposition treasury spokesman Malcolm Turnbull suggested the government's move could be a way of shifting costs from the commonwealth to the states if it brings a decline in private health insurance.
"The federal government may be slightly better off in revenue terms as a result, but the states, who are paying the bulk of the cost of the public hospitals, will be a lot worse off," he told ABC TV.
If people drop private health cover, the commonwealth will pay less on the private health insurance rebate. If they use public hospitals more, that cost would be borne by the states.
Treasurer Wayne Swan said the government's only motivation was to remove an unfair tax on up to two million Australia.
"It's not directed as a savings measure at all," he said.
"What it is directed at is giving some justice to those people who've been flogged by a surcharge which can't be justified by the circumstances."
Source: AAP
The federal government, in Tuesday's budget, plans to raise the threshold at which the surcharge comes into effect.
Currently, individuals earning more $50,000 and couples making more than $100,000 pay the additional Medicare levy if they don't have private health cover.
Under the government's changes, those thresholds will rise to $100,000 for individuals and $150,000 for couples.
The surcharge was introduced by the Howard government in 1997 to encourage people to take out private health insurance.
Private health funds believe up to 400,000 people may give up their health insurance and the cost of premiums would go up for remaining members if the government raises the threshold.
But the Australian Private Hospitals Association (APHA) disagrees.
APHA executive director Michael Roff says he believes the community will see that access to quality care in the private sector outweighs the small financial benefit of dropping the cost of health insurance.
"Australians understand the value of choice, quality and fast access provided by the private health sector," he said.
"We believe that despite the changes announced in the budget, when people sit down and evaluate the value proposition, they will decide the benefits provided by private health care outweigh any small financial saving that may accrue.
"That is why we have seen health insurance membership growing strongly in the past few years."
The Australian Health Insurance Association says its research - conducted last year - shows that two per cent of health fund members, about 200,000 of the 10 million members - would drop out if the surcharge threshold was lifted from $50,000 to $75,000.
The Doctors' Reform Society accused health funds of acting out of a vested interest.
"They ... have a vested interest in taxpayer support for the private health system, which has been helping to tear the heart out of the public health system for a decade," president Tim Woodruff said.
Opposition treasury spokesman Malcolm Turnbull suggested the government's move could be a way of shifting costs from the commonwealth to the states if it brings a decline in private health insurance.
"The federal government may be slightly better off in revenue terms as a result, but the states, who are paying the bulk of the cost of the public hospitals, will be a lot worse off," he told ABC TV.
If people drop private health cover, the commonwealth will pay less on the private health insurance rebate. If they use public hospitals more, that cost would be borne by the states.
Treasurer Wayne Swan said the government's only motivation was to remove an unfair tax on up to two million Australia.
"It's not directed as a savings measure at all," he said.
"What it is directed at is giving some justice to those people who've been flogged by a surcharge which can't be justified by the circumstances."
Source: AAP
