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Health rebate helps keep premiums affordable

Posted: 13 September 2017 4:31 pm
Couple standing in front of hotair balloon

Couple standing in front of hotair balloon

Says health insurance peak body Private Healthcare Australia.

Money spent on the private health insurance (PHI) rebate by the government is more efficient than if that money was directed at the public system, according to an independent study looking at the Australian healthcare system.

The study, commissioned by Private Healthcare Australia (PHA) and conducted by Evaluate, found that a dollar directed to the PHI rebate was up to 15% more efficient than one directed to the public system.

The PHI rebate is one of many government incentives designed to encourage Australians into taking out private health insurance.

However, many have questioned the efficacy of the rebate, and in the 2009-2010 budget, the government introduced means testing for the rebate, which had been set at a flat 30% for those under 65 until that time.

The means test took effect on 1 July 2012, with the aim of saving the government $6.78 billion over a four-year period. Come 2017 and the base-tier rebate for a single earning under $90,000 and under the age of 65 is 25.93%.

The problem is that while the rebate has been going down, the cost of private health insurance has continued to rise, which may be why consumers are ditching their private health insurance in record numbers.

“In the interests of maintaining affordability of PHI for low and middle income earners, no further reductions should be made to the rebate on PHI premiums for either hospital or ‘extras’," Private Healthcare Australia CEO, Dr Rachel David, said in a statement.

A survey conducted by finder.com.au in November 2016 found that 15% of those surveyed were planning on ditching their private health insurance in the coming year, with almost half of them (44%) citing the cost of cover as their major issue.

“The PHI Rebate allows a greater proportion of the population to access private health care, which benefits the wider community by reducing waiting times in public hospitals. A healthy private sector is essential to the sustainability of Australia’s health system and the Private Health Insurance rebate is a key component of this,” said Dr David.

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