This is a question many Australians are asking recently when faced with private health insurance payments. Why are insurance premiums so high?
The answer is complicated, but much of the health field puts it in basic math.
That is, there are too many older patients in the system — expensive older patients who use more resources. — And there aren’t enough young people to balance the ledger.
And during COVID-19, the situation worsened and more elderly patients were insured, but younger people questioned its overall value.
People in this sector believe that this month’s federal budget needs to be reformed to improve the three key measures governments use to promote health insurance coverage.
They are Medicare taxation surcharge, Private health insurance rebate When Reading lifetime health insurance..
These three schemes are to serve as a carrot and stick approach to encourage those who have private health insurance.
But over time, critics say a combination of low wage growth, premium increases, government tinkering, and social change has nullified these incentives.
They say that in its current form, leverage does not encourage young people, but keeps them out of personal health.
Public-private division
The COVID-19 restrictions made the discussion of reforms more important after the waiting list of public hospitals for selective surgery in the eastern provinces surged.
Nearly two-thirds of selective surgery is performed on private systems, as explained by Rachel David, CEO of Peak Body’s Private Healthcare Australia.
“If people need essential non-emergency surgery like hip arthroplasty and choose to have it in the private sector, it will free up space on the public waiting list,” she said. Told.
No one understands that it is better than former plumber Peter Szugatto.
A 65-year-old woman who once had private health insurance had been waiting for hip arthroplasty for three years.
Szugatto removed the cover due to rising insurance premiums. He is currently on the waiting list of the public hospital system expanded to COVID in Victoria.
“For me, it doesn’t get heavy. You have to wait, but you should use the public system,” he said.
So why are these taxes and rebates so important to the affordability of insurance?
And how do they affect you?
Medicare taxation surcharge
This is a weird little box that some people check on their tax returns, but it’s packed with punch.
If you are an Australian without private health insurance and have an annual income of $ 90,000 or more, or $ 180,000 or more per household, your annual tax will be 1-1.5%.
The calculation starts at $ 900 and could add more than $ 2,700 a year in taxes.
It was seemingly named after Medicare, as the funds raised are returned to the public system to cover this uninsured group. Not to be confused with Medicare Levy.
Rachel David said that when the surcharge was introduced 20 years ago, it was designed to encourage people with the highest tax rates to take out health insurance.
However, according to the Australian Medical Association, the government’s failure to keep pace with wages at tax thresholds means that surcharges are now reaching mid-term tax caps.
“Medicare’s tax surcharges are now applied at average wages than when they were first introduced,” said Dr. Omar Horsid, President of AMA.
At the same time, health insurance premiums far exceed inflation.
The basic policy is to get one person back about $ 1,000 a year, but it’s more expensive for the household.
Lean Wells, CEO of the Consumer Health Forum, said many consumers have found it cheaper to pay the sum and pay extra than to actually get health insurance. ..
Or if that failed, young people adopted basic or bronze-level policies to avoid taxes, but still relied on public hospitals. A system for actual treatment.
“It’s a bit of a problem,” Wells said.
Ms. David said it was definitely time to review the income threshold.
“It’s a good idea to raise income standards, but probably [rate] For very high-income people. “
In a statement, Health Minister Greg Hunt said the government had made many private health reforms, including raising the age at which children can maintain family policy to 31.
He also said the government has lifted the age limit for people with disabilities to stay in family policy.
Private health insurance rebate
At face value, this may not seem like the case, but most Australians who deprive them of their private health actually get a federal rebate on their premiums.
This is automatically calculated by the insurance company when the customer takes out insurance.
Rates range from 8 percent to 33 percent, depending on age and income.
But critics argue that these rates are structured in a way that gives incentives to the wrong groups and does not help young people enter the market.
Up to 33% discount on insurance premiums for people over 70 years old. However, Australians under the age of 65 get a discount of up to 25%, much less for high-income earners.
Private Healthcare Australia said the government needed to restore the previous system introduced by the Howard government in 1999. It was abandoned by the Gillard government in 2012 in support of the Means test.
The Consumer Health Forum opposed, arguing that older people in need of health insurance should receive greater discounts.
“Overall, I think the stratification is good,” Wells said.
AMA claims that the younger age group is being kicked out as the government tinkers with thresholds over time.
“The good thing the government can do to allow Australians to get private health insurance is to raise that levy from where it first started to 30 percent,” said Dr. Khorshid.
Reading lifetime health insurance
This penalty has a benign name, but it has a serious puncture wound on the tail.
Under the federal system, those who have not removed their private health by the age of 31 are required to pay a 2% premium after enrollment.
It is built every year for up to 10 years and has not been covered over 30 years.
So if an individual health customer signs up at age 35, the 2% load is five times, or 10%.
It was designed to encourage early life insurance, but many factors have changed significantly since it was introduced 20 years ago.
The first is soaring premiums, which the Consumer Health Forum said makes it difficult for people in their thirties to insure.
Sudden supporters are afraid that it will actually keep young people longer or completely out, as it is a penalty.
In addition, advocacy groups report that some people in their 50s uncovered for the first time.
By doing this, they will be hit by paying a 10-year cargo just to prepare for retirement when more private health insurance is needed.
AMA President Omar Horsid said the load needs to be adjusted to accommodate low wage growth and its impact on the young cohort.
“We think there is good debate about raising this lifetime health insurance threshold to 35, or perhaps 40, so that it doesn’t become a hindrance,” he said.
After Peter Szugatto withdrew his private health insurance, these loads prevented him from returning to his private health insurance system.
“The price we were seeing was about $ 700 a month for my wife and I, and I thought,’Oh, that’s ridiculous. We can’t afford it,'” he said.
Private Healthcare Australia said it would help raise the age to over 30.
“This was a lever established in the late 90’s when the demographics of the population were different,” Rachel David said.
The federal government commissioned a review of the Lifetime Health Cover in 2021, but it has not yet been released.
And the worst part is …
As Leanne Wells of the Consumer Health Forum explains, the biggest challenge when it comes to private health insurance reform is getting everyone to agree.
“A lack of consensus makes it very difficult for the government to move the agenda,” she said.
Therefore, the forum is seeking an independent investigation by the Productivity Commission.
Health Minister Greg Hunt said the government has just finished reforming the cost of medical devices and insurers can save $ 900 million over four years.
“We have also invested an additional $ 30 million over four years as part of our 2021-22 budget to improve and support the private health sector to provide quality care.” He said in a statement.
Peter Szugatto will not be able to return to his new job as an elderly care support worker until he has a new waist.
But it is everyone’s guess that his surgery will actually be done.
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