australian government spending A$6.7 billion annually About private health insurance refunds.these rebate The government’s contribution to the cost of an individual’s insurance premiums.
But our analysis High rebates for people over 65 suggest they are doing little to encourage take-up of private hospital insurance, and that is precisely the group that may benefit the most.
With this Other research It notes that these rebates are primarily aimed at high-income earners, who are more likely to have private health insurance.
Read more: Private health insurance rebates cost taxpayers $100 billion, and only some benefit. Should it be discarded?
Remember, what are these rebates?
in 1999, the Australian government introduced a private health insurance rebate. Initially, this rebate meant that the government would pay everyone his 30% of the cost of private health insurance, regardless of income or age. Then, in 2005, the Howard government increased the rebate rate to 35% for those aged 65 to 69 and 40% for those aged 70 and over, regardless of income.
Over time, the rebate rate has decreased slightly and is now dependent on both income and age. However, the discount rate for senior citizens is always higher.
We wanted to understand whether higher rebates for seniors actually encourage them to buy private health insurance.
So we looked at data from more than 300,000 people who filed tax returns over a 10-year period (2001-2012). We then compared trends in insurance coverage for people under age 65 and those over age 65 before and after the 2005 rebate policy change.
Read more: Private health insurance is undergoing a revolution.But asking people to pay more for insurance they don’t want is not the answer
what we found
We find that increased rebates lead to a small short-term increase in private health insurance coverage. We estimated that even if the rebate hike lowered premium prices by 10%, the number of people over 65 purchasing private health insurance would only increase by 1-2% over the next two years.
This means increasing rebates for seniors is a very expensive way to get them insured.
People ages 65 to 74 in the bottom 25% of income earners were most likely to buy insurance in response to increased rebates that lower their premiums. This means he earns less than $21,848 in current amounts (income increased to 2023 amounts). consumer price index).
What do we suggest?
Our findings suggest that more targeted subsidy programs are a more effective way to increase private health insurance. To accomplish this, we recommend lowering the income threshold for rebates to truly target people of all ages with low incomes.
Currently, people with incomes of $144,000 (single person) or $288,000 (family) can receive the rebate.
Other evidence supporting our proposal includes: the study It was released earlier this year. This suggests that high-income earners are more likely to purchase private insurance regardless of rebates.
Recent Consultation report We were commissioned by the Federal Health Service to examine various health insurance incentives.
of report Recommends eliminating rebates for those earning more than $108,000 for singles and $216,000 for families (rebates at $93,000 for singles and $186,000 for families) ). The report also recommends increasing rebates for people over 65 (we believe income is a better indicator of a person’s means than age).
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Are the rebates worth the money?
You should also consider whether the rebate provides value for money more broadly and across all age groups.
existing evidence show that a 10% reduction in premiums through rebates only leads to a 3.5-5% increase in private health insurance coverage across Australians.we only show this 1-2% For people over 65 years old.
Therefore, rebates may occur Increased burden on taxpayers It is primarily a windfall for those who buy insurance privately anyway, often those who are financially well-off.
Read more: Do you really need private health insurance? Here’s what you need to know before you decide
What happens if we eliminate rebates?
It’s unclear how many people would quit private insurance if the rebates were abolished.
However, when rebates were introduced, research suggests they could account for the largest amount. 10-15 percentage points of the overall acquisition rate. Other studies suggest that it may be much smaller than this, approximately: 2 percentage points.
In other words, this rebate is likely to influence the purchase of private health insurance for only a small number of people. Therefore, repealing it would have a similarly small impact.
Add to that the impact of the abolition of rebates, which will cause people to take the cover off and put even more pressure on the public system. Earlier this year, we found that private health insurance had little impact on reducing waiting times for surgeries in public hospitals in Victoria. Therefore, eliminating the rebate will likely have minimal impact on waiting lists.
Overall, the billions of dollars the government spends annually to subsidize private health insurance through rebates could be better spent on public hospitals and other high-value care, including primary and preventive care. unknown.
