I am pleased to announce today that the Government will increase the Private Health Insurance Rebate from 30% to 35% for people aged from 65 to 69 years and to 40% for people older than 70 years.
Private health insurance remains the key to private health choice for most Australians. Older people are particularly aware of how important their health is and how important it is to have choice and peace of mind when things go wrong.
Many older Australians have contributed to private health insurance for most of their adult lives. They have contributed during their younger years while enjoying good health. Now, when they need private health insurance cover most, it is important that premiums remain affordable.
The Government believes that older Australians, particularly those on fixed and low to moderate retirement incomes, deserve a further reward for contributions over the years of their health fund membership.
Older people taking out private health insurance for the first time will, of course, be eligible for the higher Rebate.
Older Australians with private health cover, along with other Australians with private health insurance, help take the pressure off our public hospital system. More than 50% of surgery is now done in private hospitals. During the seven years to 2002 03, the number of new private hospital beds increased by 12.4%, while the number of beds in public hospitals dropped by 6.7%.
The Government plans to make the higher Rebates available from April 2005, after the passage of enabling legislation. The Rebate is estimated to cost $445.5 million over the four years from 2004 05.
Further details of the new measure are provided on the Fact Sheet.
FACT SHEET
Description of new measure
Since 1 January 1999, the 30% Rebate on private health insurance has helped Australians with private health cover by reducing the cost of their premiums by 30%. Older people are more likely than others to need health care, such as timely access to elective surgery. In order to increase the affordability of private health insurance for older Australians, the Government will increase the Rebate to 35% people aged from 65 to 69 years, and to 40 per cent for people aged 70 years and over. The increases will apply both to individuals who meet these age thresholds and to couples/families where one or more members meet these age thresholds. The higher Rebate will be available for hospital cover, ancillary cover and combined cover. On a typical policy for couples or families, the increased Rebate will reduce premiums by about $100 to $200 a year over and above the existing 30% Rebate.
The measure will help older Australians who have private health insurance by providing more assistance with the cost of maintaining their cover, which gives them peace of mind, the freedom to choose their own doctor and hospital, and greater certainty about when they go into hospital. In addition, by encouraging older Australians to have private health cover, the measure will reduce pressure on the public hospital system.
Eligibility
The increased Rebate will be available to Australians aged 65 years and over who are eligible for Medicare and members of registered health funds. Couples and families with one or more members aged 65 years and over will also be eligible for the increased Rebate. Like the existing 30% Rebate, the increased Rebate will be able to be claimed as a premium reduction through private health insurance funds, a direct payment from Medicare offices, or a tax rebate in annual tax returns.
Cost
The new measure is estimated to cost $445.5 million over the four years from 2004 05.
Start date
Subject to the passage of enabling legislation, the higher Rebate will be available from April 2005.
Lifetime Health Cover
Existing Lifetime Health Cover rules will be unchanged by this measure. People born before 1 July 1934 are exempt from these rules.