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$3bn Rebate Scheme – Is Australia Making a Prudent Move

Not many people justify the healthcare scheme proposed by the Australian Federal government. The government is spending precious $3 billion dollars// to get more people to opt for private health insurance; yet this plan is not having the desired effect. Many Australians still swear by public hospital, a report has shown.

Dr Agnes Walker, chief researcher at the Australian Centre for Economic Research on Health, explained the benefits of doing away with the 30 per cent private health insurance rebate. According to Dr Walker, this would only bring a 0.3 per cent increase in the number of public hospital patients during a ten year timeframe. "The rebate was brought in with the stated aim of reducing load on public hospitals. When you look at the evidence, it didn't do that," Dr Walker said.

Employing computer modeling, the predicted number of patients likely to patronize public hospitals was forecast. The impact of lifetime health cover was also studied.

With the existing policy, it was found that the number of hospital patients in public hospitals is bound to increase. Had the 30% rebate been done away with in 2004, the increase would have been a mere 0.3 %. But if both the rebate and lifetime health cover had been done away with, the benefit would be a lot better at 12.8 per cent.

Dr Walker said, “Our simulations indicate that most of the reduction in demand for public hospitals is due to lifetime health cover, and not to the 30 per cent rebate, which was the policy with the stated aim of reducing the load on public hospitals. This finding is important as lifetime health cover involves no government subsidies whereas the 30 per cent rebate costs around $3 billion per year.”

Dr Walker felt the benefits of lifetime health cover has indeed enthused the younger lot to enroll for private insurance vis a vis the rebate, which is comparatively lackluster. Labor recently gave its nod for the rebate, and also said i
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