Political debate masks truth about affordability


Both major parties have 'form' when it comes to the rebate - making carefully-worded commitments in opposition only to make changes following their election.

The former Labor government did it between 2007 and 2013, and the Coalition did it in the 2014-15 Budget - all actions that have combined to wind-back the rebate and increase the cost of private health insurance.

The irony is that both major parties, having acted in government to explicitly increase the cost of private health insurance, now actively seek to disown and blame others for the consequences of their policies.

Rather than admitting the consequences of their actions, the evidence of which could not be clearer, both major parties blame the industry, pushing reforms and in the case of Labor a cap on premium increases that will only lead to lower benefit outlays.

Premiums rise in line with benefit outlays and costs in the wider health system, a point made in what was clearly a considered and deliberate recent intervention by the prudential regulator.

The comments by APRA executive board member, Geoff Summerhayes, reflected the findings of a recent report from the government's own Australian Institute of Health and Welfare. It found spending by private health insurers, minus the rebate, has increased dramatically as a share of total health spending.

According to the report, Health expenditure Australia 2015–16, "Since the introduction of income testing of the premium rebate in July 2012, the share of gross benefits contributed by the private health insurance funds has grown from 66.0% to 72.2%."

It continued, "The introduction of income testing has had the effect of reducing the subsidies paid by the Australian Government on private health insurance premiums without an equivalent reduction in benefits paid."

During this decade, as a consequence of the policies adopted by successive governments, what was once a 30 percent direct subsidy for private health insurance for all Australians has become a maximum rebate of 25.5 percent, for some, with millions receiving far less and even nothing.

Successive governments have acted deliberately and with intent to make private health insurance more expensive for over 10 million Australians. They should stop blaming others and take responsibility for the consequences of their actions.