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Medibank sell-off plans prompt premiums conce -

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(generated from captions) Rachel Carbonell, Lateline. Years in the planning - the sale of the country's biggest private health insurer is finally set to go ahead.

With in-principle approval by Cabinet, Medibank Private is ready to hit the market.

But details of how it will be sold are still being worked out. The Government's withdrawal from the insurance industry raises new questions about how the lid can be kept on premiums. From Canberra, Greg Jennett reports. Going, going...gone.

Medibank Private - the Government-owned giant of the health insurance industry - will go to market. There is no good reason to retain Medibank Private in government ownership but we've not yet in a position to make an announcement on that. Cabinet has toyed with the on-again-off-again sale for years. This time it seems serious.

With around a third of market share, Medibank Private should fetch around a billion dollars, but options on how to dispose of it are still being finalised. We have a choice of either a trade sale or a public float and I may have further comments on that matter in due course. Opposition is guaranteed. The Government should not do it. Medibank Private belongs to those of us who are members of it. Selling Medibank Private is going to lessen competition in the private health insurance market -

meaning there's every chance that premiums will go up further. Medibank's owners deny it, pointing to competition and the Coalition's 30% rebate as guarantees of low premiums.

The most important thing here is not so much the nature of the ownership. The most important thing here is the competition. What you need in order to ensure reasonable premiums is (a) the rebate continuing which it won't under Labor, (b) a competitive marketplace and (c) I think greater private sector involvement. What keeps prices down is competition, not public ownership. Conspicuously - no government minister has cited the other thing that controls prices - the Health Minister's ability to approve or reject increases. It's the most powerful tool the Government has to direct the market. So why isn't that being heralded as the ultimate consumer safeguard? I suspect whoever wants to buy Medibank Private will be putting the pressure on the Howard Government to take controls off the level of premiums and that's going to spell future rises as well. The Health Minister's office says talk of scrapping ministerial control over premiums is "pure speculation" and "hypothetical" but neither amounts to a denial.