It seems high income earners who take out budget plans to avoid tax will be targeted by a new federal government probe, Youcompare has found this article in the Australian
HIGH-INCOME earners who take out cheaper health insurance to avoid paying the Medicare levy surcharge will be targeted by a new federal government probe.
Amid fears that the principle of community rating is under threat, due to a major imbalance in the health insurance market, the government will also look at families and single parents who are stripping back their cover to reduce their premiums.
An intelligence unit established in the last budget has told the industry it would examine whether rising premiums and changes to government subsidies and taxes had prompted consumers to make changes to their cover that could undermine the entire health system.
“In recent years as consumers have been faced with a range of incentives to take out private health insurance, the market has reacted by increasing the availability of exclusionary and restricted products, in addition to the use of excess and co-payment based products,” the Premiums and Competition Unit said this week.
“The greater range of products available may be a positive for competition but on the other hand consumers may not be fully aware of their future care requirements and may not be able to make an informed choice.”
Community rating is a cornerstone of the health system, requiring funds not to discriminate on the basis of a person’s health status, even if it provides for little difference between insurance products.
Over the past five years, health funds have been trying to compete for money-savvy consumers by offering them policies with large excesses and co-payments or significant exclusions.
Of the 5,130,000 policies in Australia, 2,833,000 now have an excess or co-payments – often high-income earners who want to pay the lowest premiums possible while still avoiding the Medicare levy surcharge. Meanwhile 1,353,000 have exclusions. Families and single parents are more likely to have a policy with an excess and exclusions as a means of reducing their premium.
With cost-of-living pressures fuelling this market trend, insurers have been left with fewer well-paying members and more high-cost claimants, forcing them to reduce the benefits on offer, inevitably making insurance less attractive to potential new members.
There are also fears more members will be caught out when they need treatment — 33 per cent of all complaints to the Private Health Insurance Ombudsman last year related to benefits and levels of cover — or simply add their names to public hospital waiting lists to avoid out-of-pocket expenses.