Rudd Government will end the private health insurance rebate | Federal Budget 2009 | News.com.au
Rudd Government will end the private health insurance rebate
A new sliding scale for the private health insurance rebate will cut out at $120,000 for singles/ File.
* Government to end rebate from next July
* Sliding scale for health insurance rebates
* Top earners get no rebate, pay more Medicare
THE Rudd Government faces another Senate blockade if it pushes ahead with budget plans to claw back $1.9 billion in private health insurance cuts, with both the Coalition and key crossbencher Nick Xenophon accusing the Government of breaking an election promise.
The Government plans to slash the 30 per cent private health insurance rebates in Tuesday's Budget.
Independent Senator Nick Xenophon, who shares the upper house balance of power with the Greens and Family First Senator Steve Fielding, slammed the proposal as “a significant breach of trust” by the Government, which had long promised to retain the rebate.
He also questioned the logic of pursuing more cuts before the Government’s promised Productivity Commission inquiry into the public/private health mix reported, and so soon after last year’s controversial decision to raise the Medicare levy surcharge.
The Coalition, which voted against last year’s Medicare levy surcharge threshold change, called the proposal a "huge broken promise" that would push up health fund premiums and force hundreds of thousands of people onto the public system.
Rebate out, Medicare to rise
The Government plans for the private health insurance rebate to be scaled back from July next year.
The Government will also lift penalties for well-off taxpayers who refuse to buy private insurance - boosting their Medicare levy surcharges by up to 50 per cent.
The Australian understands single people earning more than $74,000 a year and couples on more than $150,000 a year will watch their insurance rebates melt away on a sliding scale.
The payments will cut out completely at incomes of $120,000 for singles and $240,000 for couples - leaving the wealthy to pay for their own insurance in its entirety.
Confirmation of the crackdown provides a glimpse of the scale of the savings task facing the Government as it battles to counter the $200 billion, four-year collapse in the size of its revenue stream caused by the global recession.
An average health insurance package for a family costs about $2600 a year.
The Howard Government gave all insured taxpayers an annual rebate worth 30 per cent of their premiums, with those aged 65 and older eligible for a refund of up to 40per cent.
Currently, uninsured singles earning more than $70,000 a year and couples on more than $140,000 (plus $1500 for each dependent child) face a Medicare levy surcharge worth an extra 1 per cent of their income.
Tuesday's Budget will repudiate Mr Howard's non-means-tested approach.
The new arrangements, taking effect from July next year, will not affect singles earning less than $74,000 a year and couples on less than $150,000 a year.
But the subsidy will tumble from 30 per cent to 20 per cent for singles earning between $74,000 and $90,000 a year and couples earning between $150,000 and $180,000 a year.
It will fall again to 10 per cent for singles earning between $90,000 and $120,000 and couples earning between $180,000 and $240,000 a year.
Singles earning more than $120,000 a year and couples on more than $240,000 will no longer receive subsidies.
However, if they refuse to take out insurance, their Medicare levy surcharge will rise to 1.5 per cent, which would lift the exposure of a couple earning $240,000 a year from $2400 a year to $3600 a year.
Mr Rudd's push to squeeze savings at the expense of middle- and high-income earners raises the possibility of further strikes against middle-class welfare next week, possibly through means tests on rebates for child-care rebates.
Read more in The Australian.
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