Health rebate will hit hip pocket

Noel Whittaker
Noel Whittaker

HEALTH insurance premiums will rise if the abolition of the rebate for private health insurance makes it through Parliament.

The intention is to increase the Medicare Levy Surcharge to a maximum of 1.5% and reduce the rebate so it cuts out absolutely once income reaches $124,000 for a single or $248,000 for a family. 

Think about a family who earns $165,000 a year and who currently pays $3,000 in private health insurance premiums.  If the proposals become law their rebate will drop from $900 to $600 which means the real cost of their premium goes from $2,100 to $2,400 -an increase of 14.3%. 

Now you may think that is small bikkies for a family on that income, even though they might be trying to educate three children, but it almost certain to be a blow to a budget that is already under pressure from rising interest rates and the ever increasing utility bills.  They probably won't want to be stung with a $1650 surcharge so may well make the expense fit their budget by downgrading their cover.   

According to a report prepared by Deloitte for the Australian Health Insurance Association "significant numbers of consumers will withdraw from their private hospital cover (1.6 million over five years), or downgrade to lower levels of cover (5.7 million consumers over five years) following the proposed changes". 

These changes at the higher end of the income scale will cascade and lead to a general increase in premiums that will hit lower income earners even though they will still be entitled to the rebate.  Many will cancel their private health insurance throwing even more people on the already strained public health system.

Noel Whittaker is a director of Whittaker Macnaught Pty Ltd. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. His email is

Topics:  noel whittaker

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