Fund rebuffs lobby over 'private health fund exodus'

NIB rejects claims that means-testing the 30 per cent private health insurance rebate will force 1.6 million people to scrap private cover.

THE nation's fifth-largest health fund has torpedoed claims by its own peak body that Labor's push to means-test the 30 per cent private health insurance rebate will force 1.6 million people to scrap their private cover.

NIB, which insures 697,000 people, told the Australian Stock Exchange yesterday its own estimate of the effects of the means test were "far less significant".

The Australian Health Insurance Association yesterday stepped up a political campaign against the means test with research showing it would prompt 1.7 per cent cent of health fund members to drop their cover next year.

But NIB told the stock exchange its own estimates suggested it would result in just 0.6 per cent of its members dropping their cover. NIB managing director Mark Fitzgibbon told The Australian he backed the AHIA's efforts to play a role in defeating poor policy, but "my primary obligation is to the market and investors".

The AHIA research was based on a phone poll of 2000 people and NIB's estimate was based on its experience of what had happened in the past when health fund premiums had gone up, he said.

Mr Fitzgibbon, a member of the AHIA board, said it was up to other people to judge whether he was undermining the industry body of which he is a member. "It's an interesting catch-22 for me, isn't it?" he said. AHIA chief Michael Armitage defended his claims, arguing that NIB had a particular constituency and sold particular products. "If this is NIB's experience, it relates to its constituency," he said. "The Deloitte Report is representative of the broad Australian community and is based on ANOP/Newspoll research of 2000 Australians households," he said.

Labor tried to introduce the means test, which will hit individuals earning over $80,000 and families earning over $160,000, in the 2009 budget but it was blocked by the Senate.

The measure, expected to save $1.9 billion over five years, will be contained in next week's budget and the government will reintroduce it to parliament. The Greens, who will control the Senate from July 1, have made clear they will support the measure.

The Coalition opposes the move and Labor needs the support of four lower house crossbenchers to get it through the House of Representatives.

The AHIA released research by consultancy group Deloitte's yesterday that claims health fund premiums would rise by 10 per cent and public hospital waiting lists surge by 400 per cent as a result of the means test.