The worrying decline in the number of Australians taking our private health insurance has led to a budgeted $1.1 billion reduction in forecast spending on the private health insurance rebate.
According to the Department of Health, in response to a question on notice tabled during the most recent Senate Estimates, the $1.1 billion downward variation reflects an update based on "recent data indicating that the growth in the number of people with private health insurance has slowed compared to the estimated number of people who would purchase private health insurance on which the earlier projections of rebate expenditure were based."
"The number of Australians with hospital cover in September 2015 was 11,302,105, increasing to 11,327,512 December 2016, an increase of 0.2 per cent," it said.
The downward variation equated to -$125.2 million in 2016-17, -$244.9 million in 2017-18, -$425.5 million in 2018-19, -$280.4 million in 2019-20 and -$118.9 million in 2020-21.
"In April 2017, some 4,928,301 policies attracted the Australian Government Rebate for private health insurance, administered by the Department of Human Services," said the Department. "Around 500,000 taxpayers also receive a refundable tax offset through the Australian Taxation Office, however a number of those consumers may have also claimed a rebate through the Department of Human Services (i.e. possibly due to misidentifying their income level)."
The rebate has undergone significant reform in recent years with means testing, changes in indexation and its removal from Lifetime Health Cover loading. The result has been an ongoing annual reduction in its value and emerging affordability issues for Australians with private health insurance.
A study released earlier this week, commissioned by Private Healthcare Australia and conducted by social policy research firm, Evaluate, found one dollar spent by government on the private health insurance rebate is up to 15 per cent more efficient than a dollar directed at the public health system.
Health minister Greg Hunt recently told an event at Parliament House in Canberra that, while this year's average premium increase was the lowest in ten years, government was working with the sector on long-term solutions to the affordability of private health insurance.