| Publication: | The Australian |
|---|---|
| Date: | 12 June 2009 |
| Section: | Money |
UP to 100,000 people could forgo health cover because of budget cuts to the private health insurance rebate - four times more than Treasury estimates - a report by Access Economics has concluded.
The report, commissioned by Catholic Health Australia, described official projections of the impact of the cuts to the insurance rebate as at the "lower end of the range of possibilities".
"We could not rule out a fall in coverage of 1 per cent of the (health fund) membership ... in other words, coverage could decline by 100,000 from where it would otherwise have been," the report says.
The Rudd government announced plans in last month's budget to claw back $1.8billion in subsidies to the private health sector by means-testing the 30 per cent health insurance rebate, in its second successive year of cuts to the industry, The Australian reports.
The government will earn another $150million by raising the Medicare levy surcharge tax penalty that applies to singles earning more than $90,000 and families earning more than $180,000 who do not take private health cover.
The government has forecast that only 25,000 people will drop their hospital cover as a result of the changes, adding no more than 8000 cases to public hospital workloads over two years.
But the private health industry has challenged Treasury forecasts of the impact of the measures before an expected Senate vote on the bill this month.
The Australian Health Insurance Association released its own analysis last month predicting almost a million people could drop or downgrade their private hospital cover.
The Access Economics report opts for more conservative estimates, but says it "reached broadly the same conclusions regarding (private health insurance) coverage as the Treasury".
Access expects a bigger hit to membership than the government does because the largest group affected by the rebate cuts -- singles earning $75,000 to $90,000 and families earning $150,000 to $180,000 -- are not subject to the increased Medicare levy surcharge rate.
Martin Laverty, chief executive officer of Catholic Health Australia, which operates 10 per cent of the hospital beds in the nation, said the loss of 100,000 current or potential health fund members would further damage the industry, which was still dealing with last year's budget cuts to the private health sector.
