Means testing is about fairness
Tanya Plibersek posted Wednesday, 25 January 2012
As published on The Punch, Wednesday 25 Janurary 2012
Bronwyn Bishop’s attack in yesterday’s Punch on the Government’s proposed means testing of the private health insurance rebate claims that people earning less than $50,000 will be the worst off. This is completely false.
People earning $50,000 or less will be among the 8 million health insurance policy holders that will not be affected by means testing at all. They won’t lose a dollar. Mrs Bishop should stop scaring pensioners.
Currently all families and individuals who pay private health insurance premiums are eligible for a rebate of at least 30 per cent on the cost of their insurance. It doesn’t matter how much you earn, you still receive the rebate. That money comes from the taxes of every working Australian. At the moment the same people that Bronwyn Bishop claims to care about are subsidising the rebate being paid to millionaires. They’re subsidising her private health insurance rebate and mine.
Means testing is designed to make sure that ordinary working families aren’t subsidising the rebates of higher income earners.
If means testing applied now, individuals earning around $80,000 or less and couples and families earning around $160,000 or less would not be affected at all. As your income goes up, the rebate you receive would be reduced, but you’d have to be a single person earning more than $124,000 or a couple earning about $248,000 or more to lose the rebate entirely. Eight out of 10 people who have private health insurance won’t lose a dollar.
Private health insurance incentives were introduced in 1997 when the insurance companies were struggling.
But the private health insurance industry is stronger than it has ever been and won’t be hurt by means testing.
What’s more, the rebate is now one of the fastest growing areas of health expenditure and expected to cost taxpayers around $5 billion in 2011-12.
If we don’t act now, the rebate will deprive the wider Australian health system of $100 billion over the next 40 years.
The Government’s reforms to better target the rebate and incentives would save taxpayers about $2.4 billion over the next three years. That’s money we can spend on more doctors and nurses, building better hospitals, providing new cancer centres in regional areas, paying for the terrific new medicines that are being developed all the time.
Australia has a world class health system, but it can always be improved. If we’re going to spend $100 billion over the next 40 years, is the most important thing we can spend it on subsidising the health insurance of higher income earners? Are we better off putting money into medicines, hospitals or training doctors and nurses?
Having a strong and sustainable health system includes making some tough choices, because no budget is unlimited.
Treasury modelling estimates that after these changes come into effect 99.7 per cent of people will remain in private health insurance. That’s because of other incentives such as Lifetime Health Cover and the Medicare levy surcharge.
Mrs Bishop should get her facts right. The people she talks about – those earning $50,000 a year - won’t be spending their hard earned tax dollars paying for the private health insurance of millionaires.
Tags: Health