Labor clearer on rebate but keeping options open

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Labor's position on the private health insurance rebate has become somewhat clearer in recent days, kind of, but not the future of the rebate itself.

Shadow minister Catherine King was unclear about the rebate's fate during an interview earlier this week, suggesting Labor did not want to prejudice the outcome of its proposed Productivity Commission inquiry, triggering a strong response from health minister Greg Hunt. 

Mr Hunt accused Labor of having a "hidden plan" to cut the rebate if elected to government at the next election.

Leader Bill Shorten quickly clarified Ms King's statement, saying Labor had "no plans to scrap the private health insurance rebate”, but he did not rule out making changes.

In another subsequent statement, Ms King said, "Labor is not considering any changes to the private health insurance rebate, other than what we have already announced. The Turnbull Government needs to make the same guarantee."

Labor has an existing policy to remove the rebate from basic cover policies, often referred to euphemistically as 'junk' policies, and recently announced it would impose a two percent cap on premium increases for two years. It also announced the proposed Productivity Commission inquiry.

Labor's policy commitment on the rebate appears limited to not scrapping it or having any 'current plans' to make changes. Yet it has not actually ruled out making future changes, presumably because it does not want to limit its ability to act in advance of any recommendations from the Productivity Commission inquiry.

The former Labor government made a similar commitment before its election in 2007. It subsequently made a number of changes to the rebate, including means-testing, indexation to the consumer price index and removing it from Lifetime Health Cover loadings, which combined to reduce its contribution to premiums and undermine affordability.

The Coalition has also made a change that reduced the rebate's contribution to premiums and undermined affordability. In the 2014-15 Budget, the first following its election in September 2013, the Coalition generated $1.7 billion in savings over five years by freezing the income thresholds for rebate eligibility at 2014-15 levels until 2020-21.