600,000 May Quit Health Insurance

The Age

Tuesday May 13, 2008

Nick Miller and Leo Shanahan

MORE than 600,000 Victorians may quit private health cover, putting more pressure on public hospitals, if the state returns to the participation rate that existed before the Medicare surcharge was introduced.

The Federal Government was under fire yesterday for its decision to lift the income threshold at which the surcharge applied, from $50,000 to $100,000 for singles.

The private health insurance industry accused Prime Minister Kevin Rudd of reneging on a promise made days before the federal election to maintain the surcharge.

Mr Rudd had used weasel words to hide his true intentions, Australia Health Insurance Association chief executive Michael Armitage said. He said lifting the surcharge threshold was differ-ent to maintaining it in most people's eyes.

Dr Armitage estimated that even after a $600 million budget injection into surgery waiting lists, public hospitals would be $43 million a year worse off. Premiums would increase for those who stuck with private insurance, he said.

Others predicted little immediate extra load on the public health system, because those likely to lead the charge out of insurance would be young, healthy professionals.

But AMA president Rosanna Capolingua said it could be a signal to Australians that they could drop their private health insurance or not buy it in the first place.

It would lead to longer waits for elective surgery and other treatment.

"Those people who genuinely cannot afford (hospital cover) will actually be pushed further down elective surgery waiting lists," she said.

At the end of last year 2.26 million Victorians had hospital cover. In 1997, when the 1% surcharge was introduced, 31% of Victorians had hospital cover. With the introduction of lifetime health cover in 2000 it increased to 42%.

If Victoria returned to the pre-surcharge level, more than 600,000 people would leave private insurance.

Canberra's Centre for Policy Development health economist Ian McAuley predicted little immediate impact from the change, apart from on insurers' hip pockets.

"You will get young people dropping out, the ones who take out cheap policies that are pretty much pure profit for the insurers," Mr McAuley said.

The young did not get sick too often and tended to use public hospitals anyway because they had cheap policies with big excesses, he said.

A spokesman for Mr Rudd's office said a promise not to lift the surcharge threshold had not been made.

BUDGET BITES WHAT WE ALREADY KNOW

- $31 billion package of tax cuts

- Medicare surcharge threshold lifted from $50,000 to $100,000 for singles and from $100,000 to $150,000 for couples

- 450,000 extra training places over four years costing $1.17 billion

- $3.1 billion over 10 years to buy water to put back into Murray Darling system

- Baby bonus and family tax benefit B to be means tested

- Child-care rebate increased from 30% to 50%, up to $7500 per child

- $1 billion over four years to give every year 9-12 student access to a computer

- $450 million over five years for all four-year-olds to have access to 15 hours of preschool a week

- $1 billion over next four years for a First Home Saver Accounts scheme to help first-time buyers

- Tax on luxury cars costing more than $57,000 up from 25% to 33%

- $2.3 billion climate change program, with $860 million for low-emissions technology

© 2008 The Age

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