ACOSS urges support for means testing of private health insurance rebate

The Australian Council of Social Service today called on the Australian Greens and independent members of Parliament to support the Federal Government’s policy to means test the private health insurance rebate.

“The rebate costs Australian’s millions of dollars in tax expenditure each year yet it is a highly inefficient and ineffective funding mechanism. It disadvantages people on low incomes who can’t afford the cost of private health insurance, and diverts vital funding from general public services,” ACOSS CEO Dr Cassandra Goldie said.

“Private health services are almost completely out of reach for people living in remote and regional parts of Australia, whose access to health services is already significantly lower than those in urban centres.

“Most importantly, the rebate for private insurance has not been shown to relieve the burden on the public health system, despite being a key argument used to support the growth in the current rebate.

“ACOSS supports means testing of the rebate and allocating the savings generated to provide support to people on low incomes and those living in parts of Australia unable to access many health services.

“Means testing the private health insurance rebate would curb an inequitable aspect of Australia’s taxation system. This is an example of a measure that would improve policy while simultaneously producing revenue savings that can be redirected towards improving affordability and accessibility of public health services.

“Cutting this rebate back is also essential if the COAG reforms to funding are to succeed in providing a more sustainable health system with better health outcomes for people in Australia.

“ACOSS is urging the federal Independents and the Greens to support this crucial measure,” Dr Goldie said.

Key statistics

• According to 2011-2012 Budget papers, Private Health Insurance cost the Government $4.7 billion between 2010-11. With the introduction of means testing, this is estimated to shrink to $3.7 billion.

• The National Rural Health Alliance reports an estimated Medicare deficit each year of about $1 billion, and growing, between major cities and rural, regional and remote areas. This deficit has been growing at the same time as the growth in the value of the PHI rebate.

• Australian Institute of Health and Welfare has just reported that 1/3 of Australians delay or go without dental treatment due to affordability, an increase on the ¼ of Australians in the same position in 1994. This increase has occurred at the same time as increase to the value of the PHI rebate.

• Findings from the Centre for Health Economics Research and Evaluation confirms other research demonstrating that affordability is a barrier to private health insurance, again demonstrating that the PHI rebate does not assist those already missing out because of the affordability of services.