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Opposition caught crying wolf over Medicare Levy Surcharge changes

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Minister for Health and Ageing


5 July 2011


Liberals cry wolf:

“…it's unbelievable that a Health Minister could believe that they could put forward a bill which would drive up the premiums on private health insurance, drive up to a million people out of private health insurance, onto the public hospital queues…”

Peter Dutton, 25 September 2008

KPMG report:

“…it is concluded that changes to the Surcharge did not [public hospital] affect activity trends.”

KPMG Report, 5 July 2011

A new independent report released today has demonstrated the Government‘s 2008 Medicare Levy Surcharge changes did not result in any impact on Australia‘s public hospital system, making a mockery of the Opposition‘s claims that a million Australians would desert private health insurance and flood the public sector.

Minister for Health and Ageing Nicola Roxon said the new report showed the Opposition was too quick to ‗cry wolf‘ instead of responsibly considering good public policy.

―The Liberal Party have been caught crying wolf and today everyone should be able to see through their scare tactics,‖ Minister Roxon said.

―This independent report by KPMG shows that public hospitals were not impacted by the Medicare Levy Surcharge thresholds introduced in 2008.

―In fact, the rate of growth in private patients in public hospitals was higher than for public activity. If the changes had indeed led to patients moving away from private health and into public hospitals as the Opposition claimed, we would have expected that trend to be reversed.

―This is the second independent report to support the Government‘s arguments and again shows that carefully considered changes to Private Health Insurance incentives can yield the right results for Australia‘s health system.

―I hope today‘s report teaches Tony Abbott a lesson about the value of evidence-based policy making and I call on the Opposition to support our Private Health Insurance rebate changes, due to be introduced into the House this week.

―The Gillard Government‘s proposed changes to the rebate are designed to make private health insurance fairer for all Australians.

―Currently, lower income Australians are subsidising the private health insurance of millionaires. Our changes will restore the balance to the rebate.

―Tony Abbott needs to stop standing up for millionaires and start advocating for lower-income Australians who actually need this rebate.‖

In October 2008, the Medicare Levy Surcharge thresholds increased for single people from $50,000 to $70,000 per year and from $100,000 to $140,000 per year for couples or families.

The number of Australians taking out private health insurance continues to grow under Labor, with 10.2 million Australians currently holding private hospital cover—the highest number since 1982.

KPMG has been commissioned to undertake an independent review of the impact of the Medicare Levy Surcharge changes on public hospital activity, operating costs and elective surgery waiting lists for the three years following the changes. Today‘s report is the second of three reports from the review. The first report, released on 22 June 2010, found that the available evidence did not show patients moving from private to public treatment. The third and final report will be completed in 2012.

The KPMG review is available online at

For all media inquiries, please contact the Minister's Office on 0409 945 476

Proposed changes to the Private Health Insurance Rebate

The Gillard Government‘s proposed changes to the Private Health Insurance rebate will see the rebate progressively reduced as incomes increase.

When the legislation takes effect, the PHI Incentive Tiers thresholds for 2011-12 will be:

At 1/7/11 UNCHANGED TIER 1 TIER 2 TIER 3 Singles

Families $80,000 or less

$160,000 or less $80,001-93,000

$160,001-186,000 $93,001-124,000

$186,001-248,000 $124,001 or more

$248,001 or more REBATE

Under 65 30% 20% 10% 0%

65-69 35% 25% 15% 0%

Over 70 40% 30% 20% 0%


All ages 0.0% 1.0% 1.25% 1.5%

*Family thresholds increase by $1,500 per child after the first.

These changes will have a negligible impact on public hospitals. Only 27,000 people are estimated to drop their hospital cover in response to the changes.