Keep Private Health Insurance Fair

Changes to Private Health Insurance closer to becoming law


Monday 17 June 2013


On June 4 the House of Representatives passed the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012, which will remove the government rebate on the LHC loading. The Bill was passed with the support of Greens MP Adam Bandt and three Independents, Tony Windsor, Rob Oakeshott and Andrew Wilkie.

In the week beginning 17 June, the Bill will come before the Senate for debate. It is expected to pass.

Also on June 4 the House of Representatives passed the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013, without the need for a formal vote. While Coalition MPs raised a number of concerns about the content of the bill during debate, it decided not to oppose the bill on the basis of what it described as a ?Budget emergency?.

This bill will also come before the Senate in the week beginning 17 June, along with the tabling of a report from the Senate Community Affairs Committee which took submissions and conducted a number of hearings regarding the bill. With the support of the Coalition, this bill will pass the Senate.

Below is an explanation of the consequences of the passage of these two bills for your private health cover. It is our contention at Australian Unity that you will either pay more for your private health insurance, or queue longer in the already struggling public health system.



It's time to protect your Rebate on Private Health Insurance


Monday 15 April 2013


The Federal Government is proposing two further policy changes to your Rebate on Private Health Insurance.

If both proposals are made law you will be faced with either paying more for your private health cover or queuing longer in the already struggling public health system.

What are the two proposed changes?

  1. 1. Remove the rebate on lifetime health cover (LHC) loading

    What does this mean?

    If you took out private hospital cover after your 31st birthday, for every year after your 31st that you didn't have it, you pay two percent extra. This extra amount, which is referred to as a loading, stops when you've had hospital cover for ten straight years.

    For example a person that took out hospital cover in 2008 when they were 40 presently has an 18 percent loading on top of the price they pay for their hospital cover.

    At the moment if you earn under $130,000 for a single or $260,000 as a family, you receive a rebate, which reduces how much you pay for your cover and how much you pay for your loading if you have one.

    The proposed change means if you incur a loading, you will pay all of it.

    How will it affect me?

    From 1 April 2014, if you incur a loading you won't receive any rebate to help you pay for it. Depending on the size of your loading you could pay an extra $30 to $500 a year.

  2. 2. Restrict your rebate increases each year in line with general inflation, which is typically significantly lower than health inflation

    What does this mean?

    Medical costs increase each year, which is why the price you pay for your health cover also increases each year. Traditionally however, when the price you pay for your health cover increases, your rebate (if you are entitled to one) increases by the same proportion.

    The proposed change means your rebate will increase only by the rate of general inflation, not the true increase in the cost.

    How will it affect me?

    From 1 April 2014, every year that the price of your cover increases by more than general inflation the gap between your rebate and price increase will become greater and greater. And you will pay the difference.

    The best way to think if this is to consider health inflation as the best guide to how much your cover might increase each year. In the past decade, general inflation has averaged 2.8 percent annually. Health inflation has averaged 5.1 percent. In 2012 general inflation was 2.2 percent and health inflation was 7.7 percent.

    For example

    Jason is 38 and single. He holds a private health insurance policy that costs him $2,300 per annum. He has an annual income of $75,000 and is therefore entitled to a 30 percent Australian Government Rebate under existing income testing arrangements.

    Assuming the cost of Jason?s premium increased by five percent per year and general inflation increases by 2.5 percent per year, in ten years? time the extra portion of the premium he will be paying himself will have increased by more than $500 per annum.

Save your rebateWant to stop these changes? Let your voice be heard

It is six months until the federal election and now is the time to act. Click here to send an email about this to your Federal MP.

After all, why should you be faced with either paying more for your private health cover or queuing longer on public hospital lists that are already under considerable strain? Let your MP know that you oppose these proposed changes.

Amanda Hagan
Chief Executive Officer, Healthcare
Australian Unity

Update on the Fairer Private Health Insurance Incentives Bill 2011


20 March 2012


The Fairer Private Health Insurance Incentives Bill 2011 was passed through the Senate on 15 March 2012. Changes will come into effect on 1 July 2012.

Australian Unity has, over the past three years, spoken to parliamentarians to explain how the policy is likely to lead to increased premiums for people on low incomes and those with chronic disease. This is because of the way health insurance risk must be spread over the entire population of lives insured.

Australian Unity will now be doing its best to reduce the impact on our members over coming years, within the constraints that will be imposed on us by this policy change.


11 February 2012


The Fairer Private Health Insurance Incentives Bill 2011 is once again being debated in parliament. Political commentators believe that the Government finally has the numbers necessary to pass the Bill, and suggest the vote may occur sometime in coming days or weeks.

This Bill is essentially the same legislation that was proposed in 2009. It is not fair at all. It penalises Australians who pay taxes and then choose to additionally fund their own health cover in order to reduce the burden on the public health sector.

It goes against one of the most important principles of the community rating system that forms the strength of our private health insurance system: that every Australian, regardless of age or health status, pays the same premium for the same health insurance product. This is a strength as it spreads the claims risk - the cost to the fund when some members get sick - equally across all members. This is known as a risk pool.

The means testing of the rebate will result in overnight premium increases of up to 43 percent for more than 2 million people. The Government suggests that only a few of them will change their buying behaviour, but this belief goes against common sense. It is logical that younger, healthier people will consider changing their level of health cover. If even a significant proportion of these people reduce their level of cover, it would leave the remaining members to carry the risk of the entire pool, thus increasing premiums for them all.

The Government has admitted that, in making this assessment, they have not modelled the effects described above.

We believe community rating is fair for all Australians and this Bill is not fair at all and urge all parliamentarians to consider the impact on the broader health system as they decide on how to vote on this Bill.

Amanda Hagan
Chief Executive Officer, Healthcare
Australian Unity



Update on the Fairer Private Health Insurance Incentives Bill 2009


Wednesday 10 March 2010


The Fairer Private Health Insurance Incentives Bill 2009 was debated in parliament on 9 March 2010 and did not pass through.

This means that individuals earning more than $75,000 a year and couples on more than $150,000 a year won't be forced to pay more for their health cover.


Friday 26 February 2010


Voting by the Senate on the Fairer Private Health Insurance Incentives Bill 2009 has not been finalised.

The Fairer Private Health Insurance Incentives Bill 2009 is made up of three bills —the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009, and the Fairer Private Health Insurance Incentives Bill 2009 (No 2).

The three bills are part of a package to effect three private health insurance tiers which include the removal of part of the private health insurance rebate, specifically for those people who have higher incomes.

Legislation related to the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009 was rejected by the Senate on Wednesday 24 February 2010.

It is expected that the Fairer Private Health Insurance Incentives Bill 2009 (No 2) to means test the 30 percent rebate will be debated and voted on when Senate next sits on 9 March 2010.

Click here for more background information about the Government's proposal.


Thursday 4 February 2010


On Wednesday 3 February the Fairer Private Health Insurance Incentives Bill 2009 which proposes to remove part of the private health insurance rebate was passed through the House of Representatives.

It is anticipated that the Bill will be introduced in the Senate for a second round of debate soon. According to reports in the media, the Opposition has vowed to block the legislation as it did in September 2009. As you may be aware, the legislation had been previously defeated in the Senate in 2009.

We believe that the proposed changes, if passed, could ultimately lead to higher premiums for all private health insurance customers and not just those on higher incomes. Click here for more background information about the Government's proposal.

We will continue to keep you informed about the legislation.

Kind Regards

Amanda Hagan
Group Executive
Australian Unity Healthcare

Fairer Private Health Insurance Incentives Bill 2009

Friday 14 August 2009

Dear Member

The Fairer Private Health Insurance Incentives Bill 2009 is not fair at all. It proposes to remove part of the private health insurance rebate, specifically for those people who have higher incomes. I believe the changes will ultimately lead to higher premiums for all private health insurance customers, including you, and not just those on higher incomes. If you share our concern take action now to keep private health insurance fair.

Amanda Hagan, CEO, Australian Unity Healthcare Limited

Before I get into the details of the new bill, it is important to remember that health costs in Australia are rising dramatically. According to the Australian Institute of Health and Welfare, the federal and state governments spend $65 billion each year on health - that's over $6,000 for every taxpayer, or approximately seven times the 1.5% Medicare Levy paid on the median income of about $60,000 per annum. That cost is expected to rise dramatically as the population ages and chronic diseases become endemic.

As a private health insurance member, you already pay your taxes and support Medicare. In addition, you have chosen to take out additional cover. Your decision, and that of 11 million other Australians, removes billions of dollars of burden from the public system. We believe that your action deserves acknowledgement.

During the election campaign in 2007, the Private Health Insurance Association sought clarification from the then Opposition about its intentions regarding the rebate, one of the key policy initiatives that support people like you who take out insurance. In correspondence dated 20 November 2007, Mr Rudd stated that:

Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

The Fairer Private Health Insurance Incentives Bill 2009 is a breach of this election promise.

Private health insurance in Australia is designed so that everyone pays the same for the same cover. Private health insurers are not allowed to refuse to cover someone who has poor health; and we must charge the same premium for the same level of cover as someone who has excellent health. At Australian Unity, we believe that this design is a good thing, preventing discrimination on a range of undesirable grounds.

We believe that the measures currently before the parliament will have a range of negative effects. According to the Private Health Insurance Administration Council (the Federal Government regulator of health insurance) the average age of the health insurance pool is 40 years. This has been relatively stable over the past four years, largely due to government policies that encourage young people to enter private health insurance. It is estimated that for every year that the "age" of the private health insurance population increases, premiums will need to rise by some 5 percent simply to cover the impact that this ageing has on the amount of benefits claimed. (This figure has been derived from analysis by an independent actuary.)

The removal of the rebate could lead to members who are younger than 40 years dropping out of health insurance or downgrading their cover. This will have an impact on ageing the private health insurance population and will in turn affect all premiums - including yours. That's not fair.

I urge you to consider the material we've presented here, including our submissions to the Senate on this matter, and, if you share our concern, find out more, take action by writing to your local member of parliament and let others know about this issue.

Amanda Hagan
Group Executive
Australian Unity Healthcare

Share your views with us
Keep Private Health Insurance Fair
Australian Unity
Level 8, 114 Albert Road
South Melbourne VIC 3205
Email: advocacy@australianunity.com.au
Fax: 1800 852 030