Policy changes 'could see 750,000 drop health insurance'

Proposed changes to the government's policy on Medicare levies could see 750,000 people abandon their private health insurance as a result of increased premiums, one of the scheme's original architects has claimed.

John Deeble, who helped to formulate the Medicare system and is now an emeritus fellow at the Australian National University, told senate hearings that proposals included in the Labor government's first budget in May would result in premiums increasing by over five per cent, the Australian reports.

The publication added that the plans will see the thresholds at which people without private health insurance have to pay a "Medicare levy" equally to one per cent of their income increased for both single people and couples.

For single people, the threshold will rise from $50,000 a year to $100,000 a year, while the limit for couples will go up from $100,000 a year to $150,000 a year.

Mr Deeble's forecast of the number of people who will drop their insurance is higher than figures from the Treasury, which according to the newspaper predicts up to 485,000 policyholders will leave their insurer.

However, it is still lower than the figure of 913,000 people given by the Australian Health Insurance Association.

Meanwhile, the Australian Medical Association (AMA) has called on the government to increase publicly-funded subsidies for those private health insurance holders on low incomes in order to counter-balance the higher premiums they will charged as a result of the policy change.

In its submission to the senate, the AMA said: "This could take the form of increasing the private health insurance rebate or providing some other financial assistance or tax relief to low-income earners to help them retain their private health insurance."

According to figures from the Private Health Insurance Administration Council, around half of all Australians now have health insurance covering general treatment.

Compare insurance providers.

Latest Money News from Money-Au.com.au