By Terence Mills
If you buy private health insurance cover, you are about to be scammed, watch out!
Greg Hunt, the responsible minister – let me rephrase that – the minister responsible, has announced that he has agreed with the health insurance companies a premium increase for 2018 in the order of 4% which he will tell you is an amazing achievement and the lowest increase in seventeen years. His media advisers have told him not to smirk or giggle when he does interviews over the next few days.
What he is actually trying to spin is that we will still be given a bloody nose but not as much as last year when the average increase was 4.84%. While there will undoubtedly be much rejoicing in the streets of the nation, what Greg won’t be telling you – or he may mumble inaudibly – is that the health insurance rebate granted to you by the commonwealth government and which you may recall as being around 30%, depending on your income, will be reducing and will come in at something like 25% on average.
The private health insurance companies won’t tell you what your government rebate is either and you will notice that they no longer show the value of the rebate on the renewal notice they send to you. Even when you ask them how much your government rebate is they will be reluctant tell you: my health insurer actually had the nerve to ask me why I wanted to know what my rebate was!
Just to be clear, the government rebate has gradually been eroded as private health insurance premiums have been increasing, known in the industry as a double whammy. Take, for example, an individual aged under 65 with an income under $90,000 the rebate has gone from 27.820% in 2015 to 26.791 per cent in 2016 and 25.934% in 2017 and if you were over 70 with income under $90,000 your rebate has gone from 37.094% in 2015 to 34.579% in 2017. The new rebate for 2018 won’t be announced until March, by which time you will have absorbed the 4% premium increase announced this week. So, your increase will, in fact, be greater than 4% as your government rebate will be reduced. What this means is that the annual increases in private health insurance premiums have been more than double the rate of inflation in recent years: Mr Hunt won’t be mentioning that.
At the same time the vast lobbying resources of the private health insurance industry are after another lurk to lock people into their dodgy products. At the moment single people who earn more than $90,000 and families earning more than $180,000 pay an extra 1% -1.5% tax if they do not have private health cover, with the levy tiered according to income. In its pre-budget submission to the federal government, Private Healthcare Australia said that they want the surcharge recalculated to provide a stronger incentive for these high-income earners to take out and maintain private health cover. They say to achieve this outcome the surcharge should be increased to a minimum of 1.5% and reach 2% for the highest income earners: what the coalition used to call a great big new tax when they were in opposition but now consider to be prudent fiscal management.
The private health insurance rebate, in 2016–17, was worth around $6.3 billion to the insurance companies as an industry subsidy and represented 27.4% of total industry premium revenue. So, as the rebate is eroded you can expect the private, for profit insurers to claw back lost revenue from their customers by premium increases.
By the way, when it comes to industry subsidies which is against everything the coalition stands for, the support for the automobile industry at around $415 million a year under the former Labor government was unsustainable according to the coalition. Yet $6.3 billion a year to private insurance companies is OK: Mr Hunt won’t be discussing that either.
All of this at a time when our once internationally lauded universal healthcare system, Medicare is undergoing government imposed stress as the fee paid to GP’s for a consultation has been frozen at $37 for six years and will not be reviewed until 2020. This was a move designed to force doctors to abandon bulk billing and introduce co-payments, originally the goal of everybody’s favourite Health Minister, none other than the egregious Peter Dutton.
When Labor suggested in 2016 that the coalition were privatising Medicare by stealth the coalition cried foul. But what they are actually doing is undermining and underfunding Medicare at every turn and making private health insurance the default system in Australia with Medicare a safety net for the poor: that’s how capitalism works – ask Donald Trump from whom we take our lead!
