Publication:	news.com.au
Date:	12 June 2009
Section:	National News

 

FOUR times as many people as Treasury predicts may drop private health cover if the Government rebate is means-tested, a report from a leading economic consultancy has tipped. But the same firm, Access Economics, has also advised the Australian Medical Association (AMA) that not a huge number of people would drop their private cover at this stage.

Treasury predicts the dropout rate will be "negligible" at 25,000 people. Access Economics says its prediction differs from official estimates because Treasury attributes the same sensitivity to price across all income brackets, whereas it has treated lower-income earners as more sensitive to price. The government argues the additional costs associated with private health insurance as a result of means-testing the rebate will be more than offset by the tax cuts next month and in July 2010. For example, the private health rebate for a person earning $80,000 a year would be $167 less under the changes, but they would receive $450 in tax cuts.