Rebate cash 'can be better spent'

HEALTH Minister Tanya Plibersek has played down the impact of $1.1 billion in cuts to private health insurance subsidies.

HEALTH Minister Tanya Plibersek has played down the impact of $1.1 billion in cuts to private health insurance subsidies, saying the funding has not been "paying the wages of doctors and nurses" and that it could be put to better use elsewhere.

As Health Department officials yesterday prepared for talks with funds later in the week, Ms Plibersek expressed confidence the changes announced by Wayne Swan would see a "slowing in the rate of growth" of the 30 per cent rebate, which costs the government $5bn a year.

From July, the rebate will no longer apply to Lifetime Health Cover, the scheme that requires one million health fund members to pay an average 24 per cent loading on their premiums for having taken out insurance later in life.

Of greater concern to all 10 million Australians who have private health insurance is the government's decision to allow the benefits of the rebate to be eroded by health inflation.

From April 2014, the rebate will extend only to premium increases at the level of general inflation, or the commercial level if it is lower.

"Health expenditure is growing at around 6.8 per cent per annum," Ms Plibersek said yesterday.

"(The rebate) will soon, by around 2022, cost around $8bn a year. In fact, it's already costing us about as much as it costs for everyone to go to the doctor through Medicare. So it was important to reduce it as an area of health expenditure because it's not a frontline service, it's not paying the wages of doctors and nurses. It's a contribution to the cost of health insurance."

Ms Plibersek said the government remained committed to the rebate, and would encourage people to keep their insurance, but needed to strike a balance between the commonwealth's contribution to public and private healthcare.

Consumer groups and the opposition have warned of the impact on household budgets, while some health funds have raised concern over the use of the Consumer Price Index rather than the health inflation rate, and others have called on the government to deregulate the industry entirely.

Ms Plibersek acknowledged premiums had been rising faster than CPI, but said "we're very keen to work with the insurance industry to see if we can continue to reduce the rate of growth in health insurance costs".

According to the latest Menzies-Nous Australian Health Survey, released yesterday, people under significant financial stress have less confidence in their ability to afford healthcare, are more likely to use the public system and, when they do, are even less satisfied with the outcome than those who go public even though they are better off.