Australia Passes Bill to Means Test Health Insurance Rebate

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Australia’s lower house passed legislation to introduce means-testing of rebates for private- health insurance as Prime Minister Julia Gillard’s government strives to return the budget to surplus.

Under the legislation, individuals earning more than A$83,000 ($89,000) a year would face a means test for the 30 percent rebate. The bill, which needs the support of the upper house Senate to become law, would also increase the surcharge paid by higher-income earners without private cover using the publicly-funded Medicare service.

The government is committed to returning its budget to surplus in 2012-13, which will require fiscal discipline, Treasurer Wayne Swan said Feb. 6. The measures are expected to save the government A$2.4 billion over three years, according to the Australian Broadcasting Corp.

Private Healthcare Australia, an industry body, said means- testing the rebate could force people out of the private system and into the public sector.

“It would increase pressure on the public hospital system and force premiums to increase,” the body, which represents 95 percent of the private health insurance industry, said in a statement.

It cited an independent report conducted by Deloitte in early 2011 that found means-testing the rebate would result in 1.6 million Australians dropping private health insurance cover over five years.

–Editors: Edward Johnson, John McCluskey http://www.businessweek.com

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