Medicare changes get the nod

(AAP) Some 250,000 people will get a tax cut and almost half a million are likely to dump private health cover after changes to the Medicare levy surcharge were approved by federal parliament.

The bill raises income thresholds for the Medicare levy.
However, critics warn that private health insurance policy holders should brace for
premium hikes and predict public hospitals will be under added pressure to the tune
of an extra 242,000 bed days a year.
The government and Independent senator Nick Xenophon had been deadlocked on the
bill, with the government seeking to raise the income level at which the Medicare
levy surcharge kicks in to $75,000 for single people without private health
insurance, up from $50,000, and $150,000 for couples, up from $100,000.
Senator Xenophon had insisted the levels should be set at $69,000 and $138,000,
respectively, and indexed to the consumer price index (CPI), while the Australian
Greens said they would not support a level for singles lower than $75,000.
The government faced the prospect of a second Senate defeat of its bid to change the
surcharge levy thresholds for the first time since they were set by the Howard
government in 1997.
Under the breakthrough deal on Thursday, the thresholds were set at $70,000 for
individuals and $140,000 for couples, indexed to wages growth, not CPI.
Health Minister Nicola Roxon said the compromise deal with Senator Xenophon and the
Australian Greens would provide immediate tax relief to 250,000 people and generate
$380 million in revenue over four years.
"Obviously, we all stand here ... not with an outcome that each of us is perfectly
happy with, but I think it shows that in these difficult economic times that
sensible people can come to sensible agreements," Ms Roxon said.
Opposition Leader Malcolm Turnbull said he still thought it was a "bad measure".
Senator Xenophon said a key part of the deal was there would be a Productivity
Commission inquiry into the health system early next year.
Treasury predictions indicate 492,000 people will bail out of private health funds
under the agreed new thresholds.
The health minister said thresholds were below what many industry groups had lobbied
for and were unlikely to have any significant impact on private health cover
premiums.
But Australian Health Insurance Association chief executive Michael Armitage said
492,000 people dropping private health cover would translate into public hospitals
having to provide an extra 242,000 bed days.
He said it was obvious the change would force up health insurance premiums.
"There is no question that premiums will have to go up," Dr Armitage said.
"The government and the Senate knew this when they passed the legislation.
"They have taken this decision in full knowledge that premiums will go up, public
hospital waiting lists will expand and the delicate balance (between the private and
public health sectors) is now, maybe, at risk."
Private health insurers have until December 17 to submit requests for premium
increases to the government.
The states and territories are currently in negotiations with the federal government
over the new five-year Australian Health Care Agreements (AHCAs) - due to be signed
by the end of the year - which cover public hospital funding arrangements.
Both the NSW and Victorian governments indicated to AAP they would demand more
funding through the AHCAs if the Medicare levy surcharge changes forced more people
into public hospitals.
"NSW will closely monitor these Medicare levy changes and if a clear impact on
demand can be demonstrated, we would be prepared to strongly advance our case with
the commonwealth," a spokesman for NSW Health Minister John Della Bosca said.
A spokesman for Victorian Health Minister Daniel Andrews said the minister would
keep tabs on any impact from the changes on public hospitals in the state.
Ms Roxon said she would not be signing any blank cheques for the states.
"I am very confident that the negotiations through COAG (Council of Australian
Governments) will deliver a significant injection of funds into our public
hospitals, and they need to have that support," she said.
"But as I have made clear, really, the big-ticket items that are on the agenda are
the sorts of reform that we will be able to deliver by working cooperatively with
the states and territories, and that means no blank cheque."