70,000 expected to 'drop' private health cover

MORE than 70,000 South Australians would drop their private health insurance under the Federal Government's plan to cut the 30 per cent rebate for high-income earners, a study shows.

An Australian Health Insurance Association analysis of Federal Budget figures, industry data and market research revealed hospital cover was likely to be dropped by nearly 20,000 in SA and 241,000 nationally. Almost 60,000 South Australians and about 728,000 across Australia would downgrade their cover.

The research also found more than 60,000 South Australians and about 774,000 people nationally were likely to drop their general treatment (ancillary) cover. The Government announced planned changes to the rebate – which cut it back for individuals earning more than $75,000 a year and couples earning more than $150,000 – in its budget on May 12.

AHIA chief executive officer Dr Michael Armitage said government claims that the changes would affect only 25,000 Australians were invalid.

"Every Australian knows that you can't take $1.9 billion from the pockets of people paying for their own health care by taking out private health insurance and not have a major impact on private health insurance," he said.

"This will affect every Australian, as every person who drops their private health cover will rely on the public health sector and every person who downgrades their hospital cover will rely on the public sector for items excluded under downgraded policies."

Dr Armitage said people leaving or downgrading cover would mean increased premiums for people remaining in private cover, with significant impact on people with incomes lower than $75,000.

"The Budget policy initiative doesn't add up and, as every Australian's health care will be negatively affected, we urge the Government to re-assess."