Unfortunately, the legislation to means test the rebate passed through the lower house today and now an uncertain period lies ahead for Australia’s health system.

The passage of the means-testing legislation through the Lower House signals a shift in the balance of Australian healthcare.

The consequence of the Gillard Government’s decision to means-test the 30% Rebate is that Australians needing healthcare will be torn between increasing costs and longer waiting lists.

Private Healthcare Australia has consistently cautioned that means-testing the 30% Rebate will force people out of the private healthcare sector and into the public system, and it will force premiums up for those who remain in private
cover.

To find out more and view our media release, click here>>>

The passage of the means-testing legislation through the Lower House signals a shift in the balance of Australian healthcare.

The consequence of the Gillard Government’s decision to means-test the 30% Rebate is that Australians needing healthcare will be torn between increasing costs and longer waiting lists.

Private Healthcare Australia has consistently cautioned that means-testing the 30% Rebate will force people out of the private healthcare sector and into the public system, and it will force premiums up for those who remain in private cover.

The Government’s arguments are flawed. The Minister says means-testing is about fairness, but as people drop or downgrade their hospital cover, premiums will have to increase for those who remain in private cover.

More than half of the Australian population has some form of private health cover and they don’t think they’re rich. For many of them, the Rebate is the only form of Government assistance they receive.

Government figures show that 5.6 million privately insured Australians live in households with an annual household income less than $50,000 and, of those, 3.4 million have an annual household income of less than $35,000.

The Government has made many incorrect assumptions during this debate, like failing to consider the impact of people downgrading their private health cover, and not taking into account the flow on effects into the public hospital system of those people who drop and downgrade their cover.

The Independent Deloitte Report remains the most accurate assessment of the impact of this legislation:

• 1.6 million Australians will withdraw from their private hospital cover over 5 years and 4.3 million will downgrade to lower levels of cover;
• 2.8 million people will withdraw from their general treatment cover over 5 years and 5.7 million will downgrade their cover;
• premiums will rise 10 per cent above what would otherwise be expected;
• the costs of treating consumers in the public hospital system are expected to rise substantially above what is currently anticipated by Government (Deloitte estimates that additional operating costs over five years will be $3.8 billion); and
• the Report concludes that another 845,000 admissions to public hospitals will be required over the next five years.

Contact:  Jen Eddy 02 62021000

Station: 2UE , Date: 10/02/2012 , Program: Breakfast, Time: 07:21 AM

Compere: Jason Morrison

Item: Dr Armitage says the figures on which the Government has based its decision to means test the health insurance rebate are flawed.

Interviewees: Tanya Plibersek, Federal Minister for Health (excerpt); Dr Michael Armitage, CEO, Private Health Association

JASON MORRISON:       I’ll say upfront, I’m quite opposed to what is often referred to as middle class welfare, handouts. You don’t need to be handing out money to people who are living – earning reasonably good money.

If the country is going well, if the country is wealthy, governments can help people have more money by taxing them less, by tax cuts, as an incentive rather than just the handout to say, yeah, go for your life.

The entitlements mentality kills this country.

But I do not get the thinking behind this. Yesterday the federal Government – it can spin it as hard as it likes – it put up the price of your private health insurance by its policy which has been put in place, again, to punish people who are successful, people who work hard with the cheapest political card game of them all, the politics of envy.

This is taxing the rich to make sure the poor get looked after. Well, that’s kind of the technique being used here.

The truth of the matter is that there’ll be no improvement at all for people who they’re describing as those in need because what will end up happening is they will be pushed further and further back in the hospital waiting list because people will their health cover. It’s already an expensive impact on people’s lives.

And the announcement yesterday of plans to introduce the means test on the 30 per cent private health insurance rebate will hit a lot of households.

I mean, let’s put it simply. We’ll deal with singles for a moment. Eighty-three thousand dollars a year is what now the Commonwealth Government thinks is where you should no longer be getting any assistance with the tax break for your health cover.

Families: $166,000. That may sound like astronomical numbers but the truth is there are many people who just make ends meet in Sydney, earning that kind of money, with families, with mortgages, and what you’ll see will happen, is people will say something has to give and that may well be private cover and if it’s private cover that means more hit on the public hospital system.

And then Tanya Plibersek, the Health Minister, comes out with the most disgraceful lie. Listen to this.

TANYA PLIBERSEK: These modest changes save $2.4 billion over the next three years. That’s 13,000 extra doctors or 26,500 nurses paid for a whole year.

JASON MORRISON: That’s possibly mathematically correct but will we get those nurses and doctors? No, we won’t. What we’ll get is the money being shoved in the kitty so that politically in an election year they can say we made our surplus. You are being done over for their failings in managing the economy.

Dr Michael Armitage is the chief executive of the Private Health Association. He’s with me this morning. Thanks for your time, good morning to you.

MICHAEL ARMITAGE: Good morning, Jason.

JASON MORRISON: What do you think the result of all this will be?

MICHAEL ARMITAGE: Well, look, I never give up and we understand that two independents in particular are yet still to make up their mind so we are continuing to put the case to them. The case is quite simple, we think.

The Government’s figures, on which they’ve based all of their policy directions, are completely flawed. We’ve proved that with a report done by Booz & Co which was released yesterday so we don’t think the independents should rely on the Government’s figures.

They should then think what will be the effect on my constituents? And the effect will be that everyone of their constituents will suffer. Those who are privately insured will pay more next year and that’s everybody, not only the people in the tiers and that means that their constituents who are on public hospital waiting lists suddenly will compete with all of those people who drop their private health insurance for cover so it means they’ll wait longer.

So really it’s a lose-lose.

JASON MORRISON: And I look at the response to this and the Government’s argument is – you’ve heard Tanya Plibersek saying, oh, we’re going to use this money for improvement to the health system. I mean, I can’t even see that because it seems the projection on all of this is about getting money into the bank so we can make the surplus exist.

Whatever their argument for the whole thing is, I think given that most people entered into this in goodwill with the threat that if they didn’t they would face extra charges, we’re, sort of, now penalising those who jumped in at the first time with a promise that is now not being delivered.

MICHAEL ARMITAGE: Well look, there’s no doubt that what we hear on a regular basis is that people say this is the only thing that the Government gives me.

I mean, the sort of people that are going to pay this is a family where a teacher’s married to a policeman, okay. They will be slugged with extra health insurance.

Now, I know, because they keep telling me all the time. They say, look, we don’t get this advantage, we don’t get that, we don’t draw a pension, we haven’t got social security. The only thing we get from the Government is a little rebate on our private health insurance, which we take so that we don’t burden the public sector, and now they’re going to slug us with that as well.

So people are really angry about this to be frank, and I don’t think it’s a good move politically may I say, but that’s another story.

JASON MORRISON: Yeah, let’s look at the raw numbers: 83,000 for singles, 166,000 for a family. And, I mean, you’re talking to people here in Sydney where sometimes those sort of salaries will sound extravagant, but they’re survival salaries in many places.

You’ve got people who will maybe this year be pushed up over that threshold because their boss is rewarding them. Well done, congratulations, here’s a pay rise. And, by the way, as a result of that pay rise…

MICHAEL ARMITAGE:  Yeah.

JASON MORRISON: …you’re actually going to be worse off.

MICHAEL ARMITAGE:  That’s exactly right. And look, the big problem, Jason, from the – from our perspective and from everyone in Australia’s perspective, for every one of your listeners, the big problem is, the Government has focused on the fact that they’re only going to penalise people above $83,000. And we accept that that is the case in year one.

But what happens in insurance is that the people who are, perhaps, fitter and healthier, who are less likely to need their private health insurance, and they are then faced with the extra costs, they take a gamble, and they say, well, I won’t ri… I won’t keep my insurance. So what happens next year is that the insurers are left with a smaller pool of sicker people, which means – because this is what insurance is all about, the risk is spread between everybody – the premiums have to go up for everybody. Not only the people in the tiers.

JASON MORRISON: Yeah.

MICHAEL ARMITAGE: Now, the other fascinating thing is that the Government’s figures say that 5.6 million people in Australia with private health insurance live in a household with an income of less than 50 grand. And 3.4 million live in a household with an income of less than 35 grand. Now, 50 grand and 35 grand are not wealthy, and that’s five and a half and 3.4 million people who next year will all be affected by the effects of this legislation. So, it’s going to hit everybody.

JASON MORRISON: Yeah, the motivations are extraordinary. I mean, they’re just playing the cheapest political card, the politics of envy, whilst at the same time punishing people who are, indeed, by typical terms, those that we actually need to be encouraging. I mean, families and – I don’t get it.

Thanks for your time this morning.

MICHAEL ARMITAGE: See you, Jason.

JASON MORRISON: Michael Armitage from the health insurance industry.

And you might sit there and say, oh well, you know, the rich can afford it. Is someone earning $83,000 a year in Sydney, you tell me, rich? That’s rich in Sydney. A family that brings in $166,000 for two people working, and you heard his example there of a teacher and a police officer, that’s rich.

I think what we have done here is taken away the incentive for good hard-working people to want to achieve, and by doing it use the cheapest political trick in the book.

*          *          End          *          *

Transcript produced by Media Monitors

We used to be the AHIA, but no longer!

We still represent the Private Health Insurance industry and the millions of Australians who have chosen Private Healthcare Cover through our industry health funds.

We are now over 12 million Australians strong

There are now over 12 million Australians with Private Healthcare: families, grandparents, parents, children, couples and singles.

These Australians have chosen Private Healthcare because it provides better quality healthcare – better cover – better access – better care – for themselves and their families.

In fact, over 50% of Australians now rely on Private Healthcare.

Our Vision

Our vision is to work independently and with governments to provide Australians with the best cover, the best access, and the best healthcare services in the world.

Our Role and Mission

Our role is to represent the over 12 million Australians who choose better quality healthcare services. Our mission is to put their healthcare needs first.

Our Quality Standards

We clearly stand for the provision of ‘better quality’ healthcare services for all our members

Our Values and Beliefs

Our members
• value responsibility and believe in taking control of their own healthcare affairs.
• value freedom of choice and believe in their right to choose their own health cover and treatment.
• value quality and believe in their right to choose better quality healthcare services.
• value service and believe that speed and convenience are important aspects of service.
• value affordability and believe that governments need to recognise the real financial contribution that members make in supporting Australia’s health system.

MICHAEL SMITH:      Michael Armitage is the CEO of the Australian Health Insurance Association.

The Government has made a number of wildly incorrect assumptions in framing their Policy Direction, such as failing to consider the impact of people downgrading their private health cover and not taking account of the flow on effects into the Public Hospitals of those people who drop and downgrade their cover, which means the Government paints an inaccurate picture of the policy’s outcomes.

An Independent report by Deloitte on the impact of means-testing the 30% Rebate, based on ANOP/Newspoll research into consumer behaviour in early 2011 found that:

• up to 1.6 million Australian will drop their cover  over five years (compared with Treasury’s estimate of 25,000);
• up to 4.3 million Australians will downgrade their cover over five years;
• premiums will increase 10% above what they otherwise would have; and
• an extra 845,000 Australians will be admitted to public hospitals.

It is likely that Federal Members of Parliament will be asked to vote on the means-testing legislation in coming weeks and they should take advice from their constituents when weighing up this important decision.

The majority of electorates have a privately insured population of more than 50% of the voters, and the majority of these people are not rich, despite Government claims.

Of the 11.8 million privately insured Australians, Government figures show that 5.6 million have an annual household income less than $50,000 and, of those, 3.4 million have an annual household income of less than $35,000.

The Private Health Insurance Industry has maintained that means-testing the 30% Rebate would force people out of the private system and into the public sector; that it would increase pressure on the public hospital system; and force premiums to increase, disadvantaging lower income earners who remain in private health insurance.

This is an issue which affects every Australian requiring health care and on behalf of private insured Australians I urge Federal Members of Parliament to consider very seriously how this piece of flawed legislation will impact Australia’s entire health system.

Media contact:  Jen Eddy 0439 240 755

The proposed policy change introduces three ‘Private Health Insurance Incentive Tiers’ based on income thresholds. For low and middle-income earners, the existing 30, 35 and 40 per cent private health insurance rebates will remain in place however singles earning over $80,000 or couples earning over $160,000 will receive a lower rebate if they choose to hold private health cover, but will face a higher surcharge if they choose not to hold private health cover, as a result of the increase in the Medicare Levy Surcharge.

It’s meant to target the rich, but a new report shows that as health fund members drop or downgrade their cover health insurance will become more expensive for everyone

Australians currently enjoy the benefits of a strong, balanced health care system. Means-testing the 30% Rebate on Private Health Insurance will put that at risk. AHIA on behalf of it members are actively lobbying to government to help keep the rebate. If you are concerned about the rebate, then there are a number of ways you can support the campaign.

Join our campaign to make the Government rethink and help Save Your Rebate.

Sign our petition to help inform federal members of Parliment of your view and ask that they reject the mean test

Calculate your rebate to understand how how your rebate may change under the government’s proposal

Register your support for the rebate and become an active member and champion for the campaign

If you choose to subscribe and join the team, we will provide you with regular up-to-date information about private health insurance and health policy, as well as suggesting ways you can help worn k to keep your 30% rebate. The information you provide will allow health insurance funds that are members of the AHIA to contact you, should your support for private health insurance be necessary. No information will be given out to anyone other than those health funds which are members of the AHIA without your permission.

Be an active member of the Keep Your 30% Rebate team today, and help protect your 30% rebate.

For every dollar you pay towards your private health insurance, the Federal Government will give you 30 cents back. You can claim this either as a deduction in premiums, as a direct payment from Medicare or in your tax return at the end of each financial year. So if your health insurance costs you $1,000 a year, you will only have to pay $700 out of your own pocket.

Currently, all Australians who get Medicare are eligible – no matter what you earn. It’s your rebate!

What is the Proposed Change?

In 2009, the government announced that from 1 July 2010 the 30% rebate on the premiums paid by private health insurance holders would be subject to a means test.

The proposed policy change introduces three ‘Private Health Insurance Incentive Tiers’ based on income thresholds which will continue to remain indexed to wages. For low and middle-income earners, the existing 30, 35 and 40 per cent private health insurance rebates will remain in place. Higher income earners will receive a lower rebate if they choose to hold private health cover, but will face a higher surcharge if they choose not to hold private health cover, as a result of the increase in the Medicare Levy Surcharge

New Report Reveals a Negative Impact  across the Healthcare System

A new Report into the impact of the Government’s policy to means-test the 30% Rebate on Private Health Insurance has concluded that the policy will have a negative impact across the entire Australian health system.

Last year private health funds contributed $12.4 billion in benefits towards the healthcare of the 11.7 million Australians with private health cover, emphasising the importance of the private health sector in delivering a balanced health system.

Government policy measures such as the 30% Rebate on Private Health Insurance, Lifetime Health Cover and the Medicare Levy Surcharge make private cover more affordable, especially for those 5.6 million Australians with private cover who live in households with annual incomes below $50,000.

The Deloitte Report, based on ANOP/Newspoll research of 2,000 Australian households, into the impact of the Gillard Government’s policy to means-test the 30% Rebate on Private Health Insurance has concluded that it will have a negative effect across the entire health system. In summary, the Report found that as a consequence of means-testing the 30% Rebate:

• 1.6 million Australians will exit their private hospital cover (compared to Treasury estimates of only 25,000), with a further 4.3 million downgrading their level of cover
• Private health insurance premiums will rise 10 per cent above what would otherwise be expected, making private cover less affordable for all Australians
• Pressure on the public hospital system will increase as more than 845,000 additional treatments will be required as people withdraw from their private cover at an estimated cost to government of $3.8 billion.

Notes:

• Rebate calculations are based on the information that you have provided and the income tiers outlined by the Australian Federal Government.
• If your rebate is to change, contact your private health insurer now and tell them which tier you are in to avoid a potential tax liability.
• Single parents and couples (including de facto couples) are subject to the family tiers.
• For families with multiple children, the income threshold increases $1,500 for each child after the first. For example, a Tier 1 family with three children will have its income threshold increased by $3,000 – from $168,001 to $171,001.
• If you or your family don’t have private health insurance hospital cover, or you choose to cancel your cover, you will pay the Medicare levy surcharge if you earn more than $84,000 (single) or $168,000 (family) in the 2012-13 financial year.
• You may also pay Lifetime Health Cover if you buy hospital cover when you are 31 or older.
• The tiers are based on more than your taxable income. To work of your income, use the Australian Taxation Office (ATO) income calculator.