Healthcare industry giants are pushing for high income earners to pay a higher Medicare levy to help support older Australians.
The call comes as the Albanese government prepares to scrap the larger health insurance rebates currently available to older Australians next year.
Under the existing system, the group receives a rebate of up to eight per cent more than younger people on the same income.
Leading private health insurers, including Bupa and Medibank, have supported Private Healthcare Australia’s (PHA) proposal.
The industry body argues a higher Medicare levy surcharge should be applied, rather than passing the cost to older Australians through higher premiums.
The surcharge would rise from the current 1.5 per cent of annual income to two per cent, or as high as three per cent for top earners making more than $164,000.
That could leave almost one million high-income Australians facing thousands of dollars more in tax if they opt out of private hospital insurance.
Top earners who choose to pay the surcharge rather than take out private hospital cover could face an additional tax bill of almost $5,000 a year.
Top earners should pay a higher Medicare levy to help support older Australians, healthcare industry giants have urged
Under the existing system, Australians aged 70 and over receive the highest rebate of up to 32 per cent, while those aged 65 to 69 receive a rebate of up to 28 per cent.
Anyone under this age is currently capped at 24 per cent, which from April 1, 2027, will become the maximum rebate for all Australians, with the amount ultimately determined by income.
Health Minister Mark Butler said the change will save the budget about $3billion over four years and ‘re-establish intergenerational equity in the rebate system’.
But the government’s changes would result in more than three million older Australians facing higher health insurance costs, including 1.32 million pensioners, PHA said.
It estimates up to 62,000 people could drop their private health cover, while another 200,000 could downgrade their policies next year, potentially leaving older Australians more vulnerable, the organisation warned.
‘We recognise the government is looking for savings and has to make tough decisions, but there are better ways to achieve this than making healthcare more expensive for millions of older Australians, particularly pensioners and people on low incomes,’ PHA chief executive Rachel David said.
Bupa, which provides health insurance cover to more than four million Australians, raised its concerns in a submission to a Senate inquiry.
The insurer warned the changes would ‘create significant affordability pressures for older’ Australians and argued the reforms should be approached differently.
The push comes as the Albanese government prepares to scrap the larger health insurance rebates currently available to older Australians next year
‘Bupa considers that reform should focus on strengthening participation incentives for younger and working-age Australians rather than reducing support for cohorts already strongly engaged in the private health system.’
The call comes as the number of people paying the Medicare levy surcharge has almost doubled in the past year, according to PHA data.
More than 900,000 Australians are now paying the surcharge, with private health insurers warning that rising costs are making cover increasingly difficult for some Australians to afford and prompting more people to rely on Medicare rather than take out private cover.
