Plans to scrap rebate on Lifetime Health Cover loading Move could push up health insurance premiums Sign up now – Big Health Insurance Switch EXCLUSIVE: THE financial punishment for taking out private health insurance after the age of 30 is set to skyrocket to an average $385. Lifetime Health Cover loading, which adds two per cent to premiums for every year of delay, already slugs a whopping 1.1 million Australians an average of nearly $270 each. Until now the saving grace for these people has been that the 30 per cent private health insurance rebate applied to the loading as well as the base premium. But the Government wants to remove the rebate on loading, which it says will add $116 to the typical cost of hospital cover. For those that take out insurance for the first time under the age of 42 the hit would likely be less severe; for those who do so over 42, it could be much more. Labor’s plan is being debated in Parliament. The Greens support it but the Coalition does not. Start of sidebar. End of sidebar. If passed into law the change would hit everyone who pays loading that didn’t already lose the rebate last July when the Government imposed means-testing. Treasury forecasts show removing the rebate would save the Government and cost those already subject to loading about $120 million in 2013-14, $130 million in 2014-15 and $140 million in 2015-16. Top-10 insurer, the not-for-profit GMHBA, recently told a Senate inquiry examining the Governments plan that it would add more than 10 per cent to premiums for 18 per cent of its customers. And Rod Bransby, head of HBF which has 48,000 members who will be stung, told the inquiry: For many members private health insurance will become unaffordable and they may choose to cancel their health insurance and rely on an already overstretched public hospital system, to the detriment of the community as a whole.” But a spokesman for Health Minister Tanya Plibersek said the Government didn’t expect a mass exodus. Rather, the change would increase the incentive to take out cover. One of the nation’s top consumer advocates disagreed. Christopher Zinn campaign director at One Big Switch and formerly the face of consumer group Choice said the loading already acted more as a disincentive. Mr Zinn said that if the Government wanted more people to take out cover it should have an amnesty” for 50-somethings, allowing them to enter the private system without penalty. Mr Zinn is currently leading the Big Health Insurance Switch campaign for more affordable cover. The campaign, which is supported by News Limited, aims to knock 10 per cent off the cost of a major provider’s policies. Since the campaign was launched three weeks ago, more than 75,000 have registered to receive a no-obligation discount insurance offer. News Limited today reveals for the first time the windfall Lifetime Health Cover loading delivers to insurers. Our analysis confirmed by an actuary with expertise in interpreting private health insurance data shows that loading generated as much as $400 million in extra premium income in 2011-12 when, according to official figures, the number being punished soared by 103,500 to 1.053 million. In the first six months of this financial year another 33,000 were caught a rate of increase that suggests as of today 1.1 million people are being stung. The insurers’ lobby group, Private Healthcare Australia, would not comment. Newss analysis also provides the most comprehensive insight available into how people of different ages would be affected by the removal of the rebate on loading. The hardest hit are 34,000 over the age of 65 who would face a 70 per cent loading without any relief.
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Private health insurance costs could rise again