Health funds fury over ‘stealth tax’
The private health insurance industry is in uproar over a NSW government plan to double a tax on people with private cover.
The private health insurance industry is in uproar over a NSW government plan to double a tax on people with private cover, and is vowing to campaign on the issue in the upcoming federal election.
Legislation introduced to NSW parliament will double the charge to those with private cover , which health funds say will lead to higher premiums and pose a bigger problem for the federal government.
If the legislation passes, health funds say it will result in a tax hike to families of $156 a year per family of two adults, which will appear on every health insurance bill in NSW in 2025.
The pricing change follows months of failed negotiations between health insurers and the NSW government, with four of the biggest insurers.
The government has previously alleged insurers have been underpaying for public hospital rooms since 2019, since legislation that required larger payments lapsed. It says this has left NSW Health out of pocket by $140m in the last financial year. At the same time, private health insurer profits have risen substantially. The government had been attempting to force the insurers to pay their stipulated room rates, but has now switched to double the state’s health insurance levy. NSW is the only state in Australia that has such a tax.
But Private Healthcare Australia dubbed the legislation an opportunistic tax grab, and said it would drive up the cost of an average silver-level health insurance policy in NSW by $156 per family per year.
Insurers say they are already factoring the issue into their bids for premium rises next year, with many insurers pushing for upwards of a five per cent lift, which would be the biggest rise in years if it was to be approved.
PHA is also preparing to launch an advertising campaign on the issue and target crucial NSW electorates in the upcoming federal election.
“NSW is the only state in Australia taxing people for contributing to their own healthcare via health insurance, and now the government is proposing to almost double that tax during a cost-of-living crisis,” said PHA chief executive Rachel David.
“This is not about improving the health system or health services in any way. People with health insurance are already paying taxes to fund public hospitals and insurance premiums to access private hospitals. It is extremely unfair to make four million people in NSW pay twice for nothing in return.”
Dr David said PHA modelling showed that the tax would prompt about 75,000 people in NSW to cancel their health insurance, heaping pressure on the public system.
She said the move amounted to privatisation of the NSW public hospital system by stealth.
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