A better reform of health insurance
AS THE Rudd government's plan to means test the private health insurance rebate headed towards defeat in the Senate yesterday, another fundamental policy dispute appeared to have become captive to the partisan imperatives of election-year politics. Health Minister Nicola Roxon lamented during an ABC radio interview that ''I think it will be very unlikely that we'll get this through today … the Liberal Party have made absolutely clear they will fight for bankers and millionaires and others getting public taxpayers' assistance for their private health insurance.'' Rather disingenuously, Ms Roxon said that although the government was not seeking an early election on the legislation, ''it's just a fact it will be there as a double-dissolution trigger''. And, asked if she would like to contest an election on the means test, she answered, ''I think that is a very clear and easy argument to make.''
The government has made no secret of the fact that this second double-dissolution trigger - it already has one in the first version of its ETS legislation - would be one it would be quite happy to pull. The 30 per cent private health insurance rebate costs more than $3.5 billion a year, making it one of the most expensive government subsidies, as well as one of the least effective. The means test would reduce the rebate for individuals earning more than $75,000 a year or couples earning more than $150,000, recouping more than $2 billion in savings. For a government intent on cutting the deficit, that is no small inducement. So although Ms Roxon rightly portrays the subsidy as welfare for the wealthy, justice is not the only issue at stake. And whether the issue be justice or the bottom line, the government must be more pleased by the opposition's intransigence than it can admit.
The Age has argued many times that the rebate is both an unjustifiable gift to the affluent and an ineffective way of maintaining private health fund membership. As the insurance industry's own research confirms, it is the stick of the Medicare surcharge, not the carrot of the rebate, that has boosted membership. It is surely fair to ask now, however, whether the almost gleeful anticipation of a double-dissolution election is the best lens through which to view the health insurance rebate. The rebate should go, but the government might have a better chance of helping the industry adjust if it instead proposed a more gradual solution. The rebate could be scaled back by 10 per cent a year over three years, still boosting the bottom line but generating less political heat in the process.
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