Medibank to forfeit $120 million

By Sue Dunlevy

THE three million members of the nation's largest health fund Medibank Private will be robbed of more than $120 million a year when the Federal Government starts clawing back 50 per cent of the fund's profits later this year. In a little noticed Budget decision Finance Minister Lindsay Tanner announced last week that the government-owned health fund would be converted into a for-profit fund. This means it would for the first time pay 30 per cent company tax on its profits and return 50 per cent of its after tax profit to the Government each year.

The decision would have robbed Medibank Private's three million members of about $120 million of its latest posted profit of $187 million. If that money was instead available to cut premiums on the fund's 1.4 million policies, they would be around $85 per policy per year lower. Medibank Private gets no funding from the Federal Government - it is entirely financed by the premiums its members pay.

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