Australia Still Stands Divided over Means Testing the Private Insurance Rebate

The issue of private health coverage in Australia has been debated endlessly, both by health fund industry representatives and consumers, as well as by spokespersons of the country’s two main political parties. While members of the Labor government have insisted time and again that the public budget for health insurance needs to be slashed, in order to save money toward a smaller national deficit, the Coalition strongly opposed this measure initially. Opposition leader Tony Abbott has said that restoring the rebate would be one of the first measures his government would implement after being elected into office. Later on, he recanted, acknowledged the importance of bringing back balance to the state budget, but added that the means testing of the rebate will eventually be eliminated, once the country’s economy is stable once more.

All the talk about means testing might lead one to believe that Coalition voters are less likely to be privately insured for health care, as the reform might have allegedly driven them to relinquish (or at least downgrade) their coverage. Yet, interestingly enough, a poll whose results were made public in late June showed that these political differences are not reflected in the health fund membership options that the electorate subscribes to. The survey indicated that an Australian citizen aged thirty, who politically supports the Coalition is 25 per cent more likely to be privately insured that a sixty year-old Labor voter. This difference in attitudes regarding coverage is pervasive and consistent across most demographic segments. The study indicates that 57 per cent of all Labor Party voters only have public insurance. 42 per cent of Coalition supporters and 54 per cent of Green party voters are also strictly publicly insured.

Older voters, ages 50 to 64 are more likely to be members of a private health fund, irrespective of political options. Yet even at this age level, the scales tip in favor of Coalition voters (65 per cent privately insured), compared to some 50 per cent of Labor supporters. Greens supporters also surpass Labor’s in terms of private coverage across all age groups, save for that of young voters, aged below 25.

Beyond this interesting correlation between political allegiances and private health coverage, it’s also worth noting that not all health funds are concerned that means testing the rebate is going to have disastrous effects on their membership figures. The only private health insurance provider listed on the stock market in Australia released a predictive statement in mid-June, which spoke of calm in the face of a forecasted storm. It’s true that this cost-cutting reform of the federal government has driven many of those insured to compare private health insurance more thoroughly. However, at least one health fund isn’t that concerned about losing coverage holders.

According to its predictions, the members’ response to means testing will be mild at best, with only under 1 per cent of policy holders (i.e. 1,900 of its total membership) giving up their coverage entirely. A further 8,000 members (below 2 per cent) are going to give up on certain benefits and end up with basic private policies as a result of the government’s decision. This particular strain of optimism has been contested both by other health fund representatives, as well as by market analysts, who claim an overly positive attitude is not warranted by current developments. One equities analyst with a reputed brokerage house has explained that the health insurance industry is likely to be disrupted by the means testing, as it will determine health funds to increase their premium costs, with holders downgrading or dropping out altogether. Our verdict is that predictions are difficult to make, regarding what is essentially unchartered territory for Australia’s private health insurance system.

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