Health Funds `forced On' The Well-off
Sydney Morning Herald
Friday May 26, 2000
The Federal Government was forcing people to buy products they did not want in its quest to limit the type of private health insurance high-income earners buy, consumer groups said yesterday.
As the impact of the Government's change sank in, private health funds were besieged with people checking on whether their policies were comprehensive enough to escape the extra 1 per cent levy on high-income earners who do not have private health insurance, or if they could still buy the cheapest packages and fulfil all the rules.
Potential customers were being told different things. One caller to the Herald said she was told by the Department of Health that she would not escape the tax if she took out a policy with an annual excess of $500 or more.
But callers to Medibank Private were being told they could take out a singles policy with a $500 excess and still escape the tax.
Late on Wednesday, the Minister for Health, Dr Wooldridge, announced that people on high incomes who took out hospital insurance from yesterday with an excess ``greater than $500 for single members or $1,000 for families/couples" would have to pay the 1 per cent Medicare levy surcharge.
His spokeswoman confirmed the change applied only to policies with excesses ``over $500 or $1,000, in other words $501 or $1,001". She said the Federal department was working yesterday to clear up any confusion in the funds.
Until now, there have been no limits on the type of policy people could buy to qualify as privately insured.
The extra Medicare surcharge for those earning $50,000 or more if single or $100,000 or more for couples or families without private cover was introduced as part of the Federal Government's raft of measures to get more people into private health insurance.
A major plank of that is Lifetime Health Cover, due to begin from July 1, which will mean that anyone over the age of 30 who does not have private insurance by that date will pay an extra premium when and if they decide to insure privately later in their lives.
The Government agreed with the Democrats when that legislation was passed last year that it would stop high-income earners being able to buy very cheap policies just to escape the tax. But no-one had known when the move would come: the minister's announcement took effect yesterday, the first day that people were aware of the change.
Dr Wooldridge said the change ``will encourage high-income earners to take out comprehensive private hospital cover and use the private health system when hospital treatment is required".
But the senior health policy officer of the Australian Consumers' Association, Ms Nicola Ballenden, said: ``The message the Government is sending is if you are well off you have a duty to buy insurance and use the private system, which is nonsense, because these people have paid high taxes supporting Medicare and have every right to use the public system."
She said people should only have to buy private insurance if they could see some value in it, not be forced to because of how much they earned. ``We are also concerned because of the fact that the surcharge isn't indexed."
© 2000 Sydney Morning Herald