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Health Care Costs Unaffected by Rebate

A new research has revealed that those who sign up to private health insurance to avoid tax or financial penalties were often younger, healthier and less likely// to be admitted to hospital as private patients.

These findings have cast doubt on claims that an increase in the number of people with insurance would relieve pressure on public hospitals.

According to Denzil Fiebig, of the University of NSW school of economics, "The rebate is a blunt instrument, relying on the notion that people with private health insurance are going to use it. It's clear from our research that is not the case."

It has been estimated that the government has spent over $2 billion each year on the rebate since its introduction in 2000. Critics say this money would be better spent on public hospitals.

Professor Fiebig said, "While private health insurance coverage has increased by 50 per cent as a result of the rebate, that is not necessarily easing pressures on the public hospital system".

His research revealed that people took out the insurance for varied reasons such as thinking that they would get better and faster care, for security or to deal with serious health concerns.

However a significant 15 per cent reported that they were forced to join a fund because of the 30 per cent government rebate, tax penalties and premium rises imposed on people each year without insurance. Fiebig said that it was these people who could just as well use the public health system as the private hospital system.

He added, "This may be because they're happy with the public … system, or it may be because of the out-of-pocket expenses they would face, even with private health insurance, in the private system."

The Federal Government has rejected these findings saying that without the 30 per cent rebate, the private health system would collapse.

Spokeswoman for the federal government, Tony Abbott said,
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