Australia’s wealthy benefit most from 30% rebate

Half of the Federal Government’s 30 per cent health rebate goes to the top 20 per cent of taxpayers with almost three-quarters going to the top 40 per cent.

A recent study conducted by the Australia Institute, an independent policy research centre, says the 30 per cent rebate scheme favours wealthy Australians.

The report recommends the rebate be a fixed amount rather than a percentage of premium and that no rebate should be applied to ancillary cover. With many young healthy Australians taking out private health cover primarily for the ancillary benefits, the removal of the rebate on ancillary cover could deter members from maintaining their cover as it becomes more expensive. The health funds rely on their healthier members to help keep the premiums down and to subsidise those members who frequently utilise health services. While a fixed rebate amount sounds like a better idea it could result in many members downgrading their cover in return for lower premiums.

With the Federal Government’s Lifetime Health Cover scheme introduced last year to encourage more Australians to take out private health insurance at a younger age, extensive reforms to the 30 per cent rebate scheme would be somewhat of a turnaround if the government did decide to adopt any of the proposed reforms. However, both the Federal Government and the Labor party have stated their commitment to maintaining the 30 per cent rebate scheme introduced in 1999.

Sydney Morning Herald, 23/10/01