Health insurance unit hits wealthy.

    by: SEAN PARNELL, HEALTH EDITOR
    From: The Australian
    December 29, 2012


HIGH-INCOME earners who take out cheaper health insurance to avoid paying the Medicare levy surcharge will be targeted by a new federal government probe.

Amid fears that the principle of community rating is under threat, due to a major imbalance in the health insurance market, the government will also look at families and single parents who are stripping back their cover to reduce their premiums.    

An intelligence unit established in the last budget has told the industry it would examine whether rising premiums and changes to government subsidies and taxes had prompted consumers to make changes to their cover that could undermine the entire health system.

"In recent years as consumers have been faced with a range of incentives to take out private health insurance, the market has reacted by increasing the availability of exclusionary and restricted products, in addition to the use of excess and co-payment based products," the Premiums and Competition Unit said this week.


"The greater range of products available may be a positive for competition but on the other hand consumers may not be fully aware of their future care requirements and may not be able to make an informed choice."

Community rating is a cornerstone of the health system, requiring funds not to discriminate on the basis of a person's health status, even if it provides for little difference between insurance products.

Over the past five years, health funds have been trying to compete for money-savvy consumers by offering them policies with large excesses and co-payments or significant exclusions.

Of the 5,130,000 policies in Australia, 2,833,000 now have an excess or co-payments - often high-income earners who want to pay the lowest premiums possible while still avoiding the Medicare levy surcharge. Meanwhile 1,353,000 have exclusions. Families and single parents are more likely to have a policy with an excess and exclusions as a means of reducing their premium.

With cost-of-living pressures fuelling this market trend, insurers have been left with fewer well-paying members and more high-cost claimants, forcing them to reduce the benefits on offer, inevitably making insurance less attractive to potential new members.

There are also fears more members will be caught out when they need treatment -- 33 per cent of all complaints to the Private Health Insurance Ombudsman last year related to benefits and levels of cover -- or simply add their names to public hospital waiting lists to avoid out-of-pocket expenses.

While there is no suggestion the government will abandon the principle of community rating, the unit will examine the more politically sensitive area of risk equalisation, whereby insurers share the hospital costs of high-risk groups, and whether the benefit to consumers outweighs any detrimental impact on pricing, competition and innovation.

As a priority, however, the unit will look at whether members can easily switch funds in search of a better deal, or whether there is a need for reforms similar to the portability measures introduced by Wayne Swan for the banking sector.

Premiums will rise again in April -- members will feel an even greater impact in future years as a result of the government reducing the scope of the rebate -- and the unit is due to report back on the portability issue in June.

The Treasurer introduced a means test for the insurance rebate, coinciding with changes to the Medicare levy surcharge that applies to higher-income earners without hospital cover.    

He has also moved to strip the rebate from the Lifetime Health Cover surcharge that applies to people who take out insurance later in life, and only apply the rebate to future premium increases at a CPI level, to save an estimated $1.1 billion in subsidies.

While health inflation is much higher than CPI, meaning the benefit provided by the rebate will be eroded over time, Health Minister Tanya Plibersek has vowed to work with health funds to keep costs down.

The government is under pressure from some health funds to further deregulate the industry and sell Medibank Private, the nation's second-largest health fund, to boost competition.

Another Claytons tax increase to add to the rest.

This effin Govt has to go.

Quote:


They already pay tax.

The top 25% of taxpayers pay around 65% of income taxes.  TWO THIRDS.  The remaining 75% contribute 35%.

That is outrageous. 

The majority 75% that pay the by far minority of taxes have the "democratic" majority and they are nothing but thieves. 

The 25% has little power.  They are unrepresented.  They are being taxed without proper representation.

Enough is enough.

Swagman wrote on Dec 29^th, 2012 at 1:02pm:


What rubbish...the public should never be subsidising the private health insurance of the wealthy.
Crikey you whinge about the deficit and then you whinge about the govt not throwing taxpayer dollars at the wealthy.
No one is forced to pay into private health insurance so if they dont want to pay they can go to a public hospital.

If you cant afford private health insurance on your income dont expect others to subsidise it for you..dont buy a product if you cant afford it.
Now stop whining

Im still furious that I cant get the public to subsidise my private golf club membership...do they really think I want to play at a scummy public course?

Kat wrote on Dec 29^th, 2012 at 3:19pm:


......I'll just have to put the rents up.....

Swagman wrote on Dec 30^th, 2012 at 7:02am:


The lifestyles of the rich and famous can be very expensive...knock yourself out