Medicare (Australia) - Medicare and Private Health Insurance

Medicare and Private Health Insurance

Debates regarding Medicare focus on the two-tier system and the role of private health insurance. Controversial issues include:

• Whether people with means should take up private health insurance
• Whether rebates/incentives should be given in terms of private health insurance
• People with health insurance still accessing the tax-payer funded public system rather than relying on their insurance.
• People with private health insurance are still required to pay a 1.5% levy on their taxes regardless of their income and usage of the system.

People who take up private health insurance are currently rewarded in a number of ways. They receive a Private Health Insurance Rebate that subsidises 30% of their insurance premiums, increasing to 35% or 40% for people over 65. Critics say that the rebate is an unfair subsidy to those who can afford health insurance, claiming the money would be better spent on public hospitals where it would benefit everyone. Supporters say people must be encouraged into the private health care system, claiming the public system is not universally sustainable for the future. Similarly, even after the introduction of the rebate, some private health insurance organisations have raised their premiums most years, somewhat negating the benefit of the rebate.

As at March 2010 approximately 44.5% of Australians also retain private health insurance, even though they are already entitled to free treatment in public hospitals.

The proportion of Australians with private health insurance was declining, but has increased again with the introduction of Lifetime Health Cover (where people who take out private hospital insurance later in life pay higher premiums than those who have held coverage since they were younger) and tax incentives to take out private cover (such as the Medicare Levy Surcharge).