Will Swan Budget see health insurance customers fly?

While the Budget announcement may be over, the recriminations from Wayne Swan's first as treasurer continue.

A number of proposals effected people who Mr Swan called "working families" - who voted Labor in their millions in November's federal elections.

And one of the major policies to effect working families is the change in the threshold at which the penalty on people who have no private health insurance kicks in.

Under the Howard government, private health insurance was a must for most people, with penalties charged on anyone earning more than $50,000 not having private cover alongside their Medicare allowance.

However, in fulfilling a pre-election promise, as many as half a million Australians could change - or even leave - their health insurance companies due to the Budget.

As part of a $1 billion initiative, the penalty level will be increased from earnings of $50,000 to $100,000 for singles and from $100,000 to $150,000 for families.

A huge change that could shake up the private health insurance industry and, as a result of competition, force premiums down in the future, the Australian reported.

Mr Swan said: "We are a supporter of private health insurance and we are a supporter of the 30 per cent rebate and the variations to it as it runs up the scale.

"But we cannot support this sort of compulsory taxation on a group of people who don't deserve to be hit for six."

The Australian Health Insurance Association had estimated that 400,000 people would drop their cover and end up on public hospital waiting lists.

Only 44 per cent of Australians, or 9.4 million people, held hospital cover with private health funds at the end of last year

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