Health Cover: Wealthy To Pay Up
Sydney Morning Herald
Friday September 24, 1999
Thousands of upper-income earners with cheap health insurance will be forced to pay the 1 per cent Medicare surcharge under regulations planned by the Federal Government.
The Government also plans a campaign urging doctors to reveal to patients before their treatment how much they face in gap payments.
Both plans are part of a deal with the Australian Democrats to ensure the passage of legislation aimed at pushing more Australians into private health insurance.
The Health Minister, Dr Wooldridge, has pledged to introduce from next July regulations preventing the well-off from using low-cost insurance in which they pay an excess of more than $500 and avoid the Medicare surcharge.
The 1 per cent surcharge is currently imposed on individuals earning more than $50,000 and families on more than $100,000 a year who do not have any private cover.
More than 2.2 million of the 6 million Australians covered by private health insurance have the so-called front-end deductible cover. No figures were available last night on how many policies comprised $500-plus deductible provisions.
The Opposition and the Democrats have argued that the big increase in the purchase of such products provided an inequitable perk for the well-off, particularly when the Government was already paying out $1.6 billion in private insurance tax rebates.
The measure is one of several concessions Dr Wooldridge has made to the Democrats in a deal to allow the Government's lifetime health cover scheme, which will introduce penalties for those who take out health insurance after July 1 next year.
Under the current arrangements, high-income earners can avoid the Medicare surcharge by taking out policies costing only a few hundred dollars a year but which provide minimal cover.
A standard policy offered by Medibank Private would cost a family about $1,350 a year, and cover all costs. But a family prepared to pay the first $1,000 in hospital bills can insure for a premium cost of about $680 a year, and escape the Medicare surcharge.
The new measure will still mean that those with high front-end deductible policies can claim the 30 per cent rebate and can also use such policies to avoid the impact of the Government's new lifetime health cover penalties.
Dr Wooldridge said in a letter to the Democrats' leader, Senator Lees, that although it planned to regulate to make those with front-end deductible policies of over $500 liable to the Medicare surcharge, it would not discourage low- income people from buying cheap insurance.
In other concessions, Dr Wooldridge has promised to ensure that the States and Territories will not be worse off as a result of "clawback" provisions which would reduce public hospital funding in line with increases in private health insurance membership.
He has also agreed that the Government will produce a brochure detailing patients' rights in regard to gap payments which will advise patients how to ascertain from doctors what out-of-pocket charges they face when their doctor or specialist charges above the Medicare rate. The brochures will be made available in Medicare offices within two months.
The Government has agreed that in its advertising campaign for the lifetime health cover scheme it will state that all Australians are entitled to free public hospital treatment, and to avoid any negative connotations about the public health system.
© 1999 Sydney Morning Herald
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