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Health facts and priorities each fortnight from New Matilda and the Australian Health Policy Institute

The Federal Government’s 30 per cent rebate on private health insurance is estimated to cost tax payers over $2.5 billion per year. Yet most of the benefit derived from this rebate (69 per cent) goes to households earning more than $50,000 per year (only 53 per cent of the population) – assuming private health insurance premiums are standard across income groups.

Low income groups are much less likely to take out private health insurance. Only 13 per cent of young single parents have private health insurance, and for Australians who live in households with incomes below $25,000 per year the rate of private health cover is only 24 per cent. On the other hand, 65 per cent of older people with a household income over $40,000 have private health cover, for people in households with incomes over $100,000 the rate of private health insurance is 69 per cent. Thus, Australian tax payers are funding a private health insurance rebate that is primarily benefiting the wealthier members of our community.

The head of Ramsay Health Care, Australia’s new largest private hospital operator, has announced that consumers should expect private health insurance premiums to keep rising by twice the inflation rate every year. This will result in more private and government expenditure on private health insurance, and more tax-payers dollars being redirected to the 30 per cent health insurance rebate.

Source: Denniss, R. Who benefits from private health insurance in Australia? The Australia Institute, March 2005. Available from URL: http://www.tai.org.au/

Amanda Dominello
Australian Health Policy Institute
at The University of Sydney

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Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.