Health Insurance: PHI Premiums Subsidise Public Hospitals
Thursday, May 3, 2012 8:57The Private Health Insurance Administration Council (PHIAC) dropped a bombshell with the release of its 2010-2011 report, in which it revealed that benefits paid out of private health funds for services delivered by public hospitals rose by more than 10 per cent, the highest increase in ant category of expenditure.
By comparison, spending on private hospital benefits increased only 7 per cent. Given that each state has an obligation to provide citizens with services in public hospitals at no cost to the patient, lobby groups from all quarters are leaping on the bandwagon and using data culled from the report as a means of justifying their stance.
The government, unsurprisingly, considers the figures to be a complete vindication of their stance on means testing the private health insurance rebate, currently set at 30 per cent. Health Minister Tanya Plibersek claimed that if the trend continued, the government could save up to $2.4 billion of public funds during the coming three years.
Predictably, she also used the report to score political points, commenting “It is not appropriate for lower and middle income Australians to be subsidising the health insurance of millionaires.”
What is clear from the data provided by PHIAC is that private health insurers are funding an increasing proportion of all hospital costs, with around one in 10 patients who receive treatment in public hospitals doing so as private patients. According to a recent article in The Australian, several states are “actively encouraging patients to use their private health insurance, even offering to pay their excess” in an effort to avoid paying the cost of care from the public purse.
The storm over means testing refuses to subside, with public-interest bodies, politicians and industry pundits all pushing their point of view. The industry, in particular, is concerned that consumers will decline to renew their policies on expiry – simply in order to save money in today’s hard times. Counter to that, the government points out that large numbers of Australians continue to sign up for new policies, notwithstanding the pending changes.
The consumer group CHOICE is advising people to consider every option before jumping ship. It believes that even high-earners, specifically targeted by the government’s changes, will be better off if they retain a basic level of hospital cover, thus avoiding the increases in Medicare Levy Surcharge (MLS), paid by people who do not have private health insurance.
Whatever, the truth of the matter, private health insurance and related matters are filling plenty of column inches across the country. For those readers who have spent the past six months locked in a closet, here is a reminder of the changes that will hit your pocket from 1 July 2012:
If you are single and earn more than $84,000 a year, or if you are a family or couple and earn more than $168,000 a year, your private health insurance rebate will be reduced. The more you earn, the greater the reduction, and if you earn more than $129,000 as a single or more than $258,000 as a family or couple, you will receive no rebate at all.
Taking a second bite of the cherry, the government will also increase the MLS rate for those who earn the most, winching it up in half-per-cent steps to a maximum of 2.5 per cent. Confused? Join the club – a recent survey revealed that one third of Australians don’t understand the rules correctly, with many failing to realise that the rebate is available on all premiums, not only those that relate to hospital care. No wonder that many people just switch off when the discussion turns to the subject of PHI.
What should you do? Keep yourself in the picture and shop around. Sites like http://www.helpmechoose.com.au/compare-private-health-insurance/ offer great ideas for saving yourself money without sacrificing the level of cover to which you are entitled.









