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Prime Minister Gillard Proposes Private Health Insurance Rebate Reform

The number of Australians enrolled in the private health insurance market is at a record high, with more than 10 million covered privately in 2010. While public hospital care is provided free to patients to Australia, people have the option to pay for private care in public or private hospitals. In light of this trend, Prime Minister Julia Gillard has submitted a proposal to save the government $1.9 billion by eliminating private insurance rebates for higher-income Australians.

Currently all Australians, regardless of their income, are eligible to receive a government subsidy of at least 30 percent of their private health insurance premiums, with higher rebates (up to 40%) for older people. Under the proposed plan, insurance rebates would taper off and eventually disappear once incomes reach a certain level. Rebates would begin to taper off at $70,000 and end at $120,000 for singles. For families, rebates start to taper at $150,000 and are eliminated at $240,000. The average monthly premiums currently paid by singles and families are $750 to $1,000 and $1,500 to $2,000, respectively.

Similar proposals have been defeated twice in the Australian Senate. Opponents fear the resulting increase in private insurance premiums paid directly by the consumer could drive people to drop private coverage, thereby straining the public system. Australian Health Minister Nicola Roxon and proponents of the reform argue that the savings from rebate reform could be reinvested in other areas such as doctors, nurses, and hospital beds. The timetable for taking the proposal forward has not yet been decided.


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