Catholic Health Australia wants the federal government to make 'bronze' level private health insurance the new minimum requirement for the Medicare Levy Surcharge (MLS).
The organisation has used its 2022-23 pre-Budget submission to add to its reform agenda by removing ‘basic’ insurance policies from eligibility to avoid the MLS.
CHA health policy manager Alex Lynch said these basic policies account for a significant number of those sold today.
"Most of these ‘junk’ policies merely allow holders to enter the public system as a private patient. Junk policies allow individuals to avoid paying extra tax and provide a super-easy revenue stream for private health insurers. But they offer zero relief to the overburdened public hospital system, nor value to customers," said Mr Lynch.
"We need to recalibrate the system so people are either paying the MLS to fund more Medicare or receiving proper insurance that reliably allows them to be treated in the private health system. Our current system, which encourages private health insurers to make big profits from selling near-worthless products, is a shocking waste our health system can no longer afford."
CHA says bronze-level policies, which cover 18 categories of services in private hospitals, should be the new floor for Australians who wish to be exempt from the MLS.
“A private health policy should give you the chance to exercise choice and use private hospitals where suitable," said Mr Lynch.
"The pandemic has highlighted the need for government to encourage the use of private hospitals so they can take pressure off the public system. But this can only happen if we start winding up the sale of ‘junk’ private health insurance that sees people pushed into public hospitals anyway."