Private health deal done, debate continues

14 Feb 2012, 8:46 pm   -   Source: AAP

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Wealthy Australians will pay more for private health insurance after Labor secured support to means test the rebate, with a vote expected on Wednesday.

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After a four-year fight the federal government has finally secured the numbers to means-test the private health insurance (PHI) rebate, by cutting a deal with the Greens.

Labor won over the minor party by agreeing to spend an extra $165 million on dental care.

It already had the support of key independents Rob Oakeshott and Andrew Wilkie.

"I feel confident this legislation will now pass in an unamended form," Health Minister Tanya Plibersek said on Tuesday.

"We'll no longer see poorer Australians subsidising the private health insurance of wealthier Australians."

The 30 per cent PHI rebate will be means-tested for individuals earning more than $83,000 and families earning more than $166,000.

Individuals earning more than $129,000 and families on incomes greater than $258,000 will lose the rebate altogether. They'll pay around $500 and $1000 extra for cover respectively.

Even so, high-income earners will generally be better off staying in a fund to avoid paying an increased Medicare levy surcharge worth 1.5 per cent of taxable income on those without cover.

While the Greens initially opposed boosting the surcharge they relented on Tuesday after Labor promised to put the $165 million it will raise over three years into dental care.

"The Greens for a long time have campaigned for universal, Medicare-funded dental care," health spokesman Richard Di Natale told reporters.

"Today's announcement brings us one step closer towards that important goal."

Greens lower house MP Adam Bandt says going to the dentist should be like going to the doctor.

The minor party still wants $1 billion invested in dental care in the May budget towards a universal Denticare system rolled out over five years at a total cost to the commonwealth of $5 billion a year.

Ms Plibersek suggested on Tuesday that was a pipedream.

Any Medicare-funded dental treatment would have to be means-tested and targeted towards those who couldn't afford to pay for a dentist, she said.

Opposition Leader Tony Abbott on Tuesday again refused to say whether a coalition government would reinstate the full 30 per cent PHI rebate, which was introduced by the former coalition Howard government.

"We created it, we own it, we support it and we will fight for it," Mr Abbott told reporters in Queanbeyan.

Mr Abbott and industry argue the PHI reforms will see 1.6 million Australians drop their private hospital cover over the next five years and another 4.3 million downgrade their plans.

The government, on the other hand, claims just 0.3 per cent, or 27,000 people, will drop out of the private system.

Labor won the support of the coalition to extend debate on the package of bills in the lower house until late on Tuesday night and to hold off the vote until Wednesday morning.

Mr Wilkie said on Tuesday he'd definitely be supporting the reforms.

"Lower wage earners will benefit from more funding for the public health system while the impost on higher wage earners is not unreasonable," the Tasmanian MP said in a statement.

Fellow independent Rob Oakeshott also confirmed he would vote for the means-testing of the rebate.

Mr Oakeshott said it should be the first of several austerity measures the government should take to make Australia's health system sustainable.

"We are not a money tree," he said.

"We need politicians with steel in their spine to make the challenging decisions that will be needed in the next decade."

The new means test and surcharge levy will apply from July 1. The reforms have been sunk in the Senate twice previously.

Debate continues.

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