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February 8, 2012
The government’s bill to means test private health insurance rebates for high-income earners is scheduled for debate on Thursday in the House of Representatives. Currently, anyone who takes out private health insurance receives a 30% government refund on their premiums, courtesy of the Howard Government. The Liberals finally came to accept Medicare but then used a succession of carrots and sticks to get people back into private health insurance.
Diane Cordell
Under Labor's proposed scheme, singles with health insurance earning more than $80,000 and couples earning more than $160,000 would receive a rebate of 10% to 20%. Singles earning $124,000 and couples on $248,000 would no longer be eligible. The bill includes a penalty for higher income earners who don’t take out private health insurance – the Medicare levy surcharge.
These measure are part of Labor's agenda to roll back some of the middle-class welfare that Howard introduced to health and social security payments.
However, these measure have been knocked back by the Senate, mainly because of the Liberal Party who just love a big welfare state in spite of the small government rhetoric.
They also love the idea means testing welfare payments (welfare should be a safety net) but are opposed to means testing the private health insurance rebate. Hence they support the big social democratic welfare state they say they are deeply opposed to.
The proposals have the benefit of removing a glaring inequity in our present arrangements, which direct subsidies disproportionately to the well-off and underpin a middle class entitlement culture. Class war say the Liberals, even though the money saved could, and should, be used to improve public health services.
The policy issue here is that if we accept that private hospitals serve an important function, then they should be funded by means other than through private Insurance. Public funds for private hospitals should be paid directly to them, rather than being churned through private insurance where around 15 percent of that money goes in administration and profits. That would also be fairer to those Australians who pay for private hospital care from their own pockets, without being dependent on insurance.
Secondly, private health insurance is an expensive and clumsy way to do what the tax system and Medicare do so much better — that is to distribute funds to those who need health care.
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Private health care is not for everybody and people choose not to be in it for a variety of reasons. Too costly, large gap fees, unnecessary because they are healthy or find the public system adequate for their needs are just some of the reasons.
Our health system has some faults I guess but from what I have seen in even the western countries it is quite good.