A government plan affecting more than 3 million Australians aged over 65 has triggered fierce criticism, with the opposition condemning it as a “sneaky tax” on seniors.
Before the budget, Health Minister Mark Butler confirmed changes to private health insurance rebates that will leave older Australians paying the same amount for cover as people in their 50s. The policy scraps the higher rebates previously available to those aged 65 and over.
Some calculations suggest the change could lift private health insurance costs by as much as $250 a year and lead about 44,000 people to drop their cover. For some over 70s, the loss could be closer to $500 a year.
When the policy was announced, Mr Butler said the existing arrangement was “not fair between generations” and said the $3 billion saved over four years would be directed into aged care.
Speaking on Channel 7’s Sunrise, he accused the health insurance industry of promoting “self-serving modelling”.
“But we’re confident that this is the right decision, and it’s important to remember while we’re doing this, we have to find more money for aged care services,’’ he said.
He said the savings would be redirected into support for older Australians.
“So, every dollar we save through this measure will be invested in more aged care beds, better care, more aged care, home care packages, because we know every single budget we’re having to find more money to care for people who need that care and deserve that care.
“Frankly, and there’s no lazy free money lying around. We have to take sometimes quite hard decisions in a budget, and this is a hard decision.”
Sunrise host Nat Barr put a scenario to the minister involving an older Australian with a premium of about $6,000.
“If you’re over 65, you’ll lose about $250 a year. If you’re over 70, you might lose about $500 a year. They’re sort of rough numbers,’’ she said.
She then challenged the government’s assumptions about how many people would leave private cover.
“If you take that rebate off those people, how do you know that only 40,000 will go off the private health system. What if your Treasury modelling figures are wrong? What if tens of thousands just say, ‘You know what? I am sick of this. I’m getting out of private health’, and then more people go into public hospitals?”
Mr Butler said the government had been examining the likely effects for some time.
“Well, we’ve been modelling these things for quite a while,’’ Mr Butler replied.
“There’ve been a range of changes over the years made, and increases happen to private health insurance membership, of course. Sorry, fees every single year.
“So we have some experience in understanding the behavioural pact of these things.
“But remember, what this will mean now is two households next to each other, for example, on $50,000, one of them over 65, the other household in their 40s or in their 50s with kids, they’ll now both receive the same subsidy from government or from taxpayers to pay for their private health insurance.
“So about a quarter of their private health bill will be paid for by taxpayers, and I think that’s a pretty equitable place to be. Two households next to each other give the same subsidy based on their income.”
Barr pressed him on whether that amounted to fairness across generations.
“So it’s multigenerational equity? For people over 70 who have some of this taken off them?,’’ Nat Barr asked.
Mr Butler returned to the pressure on aged care funding.
“Well, we’ve had to find more money to fund aged care services,’’ Mr Butler replied.
“We’ve put an eye-watering amount of extra money into aged care over the last two years to get it out of the position that the Royal Commission described it as neglect, and to fund the extra demand that’s coming from the ageing of the baby boomer generation, and that sometimes involves difficult decisions in a budget.
“I feel like this has been a difficult decision. Of course, I’d prefer not to make it, but I think it takes us back to the old position where people received health insurance subsidies based on their income rather than their age.”
Senator Hume attacked the measure, describing it as a broken promise and a major hit on older Australians.
“This is a tricky and sneaky, and dare I say, mean-spirited $11 billion tax on older Australians,’’ she said.
“Mark, you didn’t announce this before the election, and I think it would have made a serious impact on the way people thought about the Labor Party if you had have done that.
“Let’s face it, a lot of these older Australians are on fixed incomes, and they simply can’t absorb the changes, the new imposts that you’ve made on their private health insurance.
“They’ve done the right thing for years. They’ve alleviated the pressure on the public system, and now you’re going to tax them more.
“That seems profoundly unfair when you’ve got your own Labor health ministers from other states telling you that this is going to affect the public health system. Well, that should be a warning bell.”
She said older Australians had flooded her office with complaints and warnings about what the policy could mean for them.
Senator Hume said her office had been inundated with “emails and letters from older Australians that are telling me that they’re either going to go have to go back to work or they’re going to have to give up on their private health insurance.”
“And what that means for younger Australians, if they don’t have private health insurance, if they have an accident or they get sick and they turn up to an emergency ward, well, they’re going to have to take a queue and stand in a queue behind older Australians that have given up on their private health insurance,’’ she said.
“They’re going to be on waiting lists for critical care behind older Australians that would have otherwise been in the private system.
“This is a false economy, but moreover, it’s another sneaky Labor tax on older Australians.”
Asked whether pensioners would lose the rebate entirely, Mr Butler said they would still receive government support, but at the lower rate.
“No, you get a rebate. You just get the same rebate, the same rebate that the household next door in their 50s with kids will be getting for their private health insurance,’’ he said.
“So if you’re a pensioner, taxpayers will still pay about a quarter of your private health insurance. There was a premium that older Australians would get. They’d get a better payment than the household next door to them that happen to be in their 40s and 50s.
“Now we’re going back to the position. We’re going back to the position where people get that subsidy based on their income, and every dollar we save here is going into the critical aged care services that we need to continue to build for older Australians.”
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