Australia's health funds have come out in warning against any changes to the private health insurance rebate in the May budget. Medibank Private's Managing Director, George Savvides, said that altering or axing the rebate altogether would be "counterproductive from an economic point of view", and lead to policyholders paying more for the same benefits.
The rebate entitles many Australians to reclaim a sizeable chunk of their private health insurance costs.
The rebate entitles many Australians to reclaim a sizeable chunk of their private health insurance costs. Individuals and families can receive up to 37.094 per cent of their health insurance payments back, depending on their income and age.
Those with higher levels of earnings are given less of a leg up, and those of an older age a higher percentage of return. Since being introduced in 1999 by the Howard government, the rebate has undoubtedly played a vital part in removing some of the cost barriers for policyholders, and helping to ease some pressure on the public health system in the process.
However, the future of the private health insurance rebate has been under the microscope in recent times, with Mr Savvides saying that axing it is one of at least six proposals being considered by a government looking to ease its spending.
Insurers are understandably against the idea of removing or even changing the initiative – one that has helped millions of Australians afford private health cover. In an interview with the ABC, Medibank's boss gave his opinion on the matter.
Pressures on cost
"The rebate is the government's subsidy on the purchase of a premium when they take out private health insurance," he began.
With health insurers saying their own budgets are being stretched by an ageing population and expensive medical technologies, it appears the onus will be on policyholders to pay more, not on health funds to lower their premiums.
Mr Savvides continued: "If the government was to withdraw that subsidy then the individual has to make the difference up. So, it's quite a blunt instrument, government to consumer."
Health funds are reluctant to foot the bill, nor could they afford to, despite Medibank this month recording $228 million in first-half profits for 2016.
Pressures on quality
If the rebate is scrapped, it will also likely increase the number of Australians who buy the cheapest possible policy, not necessarily one that will cover them when they need it. Health insurance quality is an ongoing issue, and one the government is certainly aware of.
If you're looking to take out health insurance before a decision is made in May, and before premiums rise on April 1, get in touch with our team. HICA works with a large range of health funds, and can work impartially to help you compare health insurance policies. Call us today on 1300 44 22 01.