Just to clarify - I was asked today why not just direct the $3 billion straight in to public health? Well - I'd be all for injecting $3 billion into public health; But I say 'fix the public health system and people will come'; Fix the public system and the Private Health Insurance Rebate will wither away because consumers no longer see the need for it. But in the meantime we have a Conservative government. So first get rid of the blackmail against low income Australians in the form of the Lifetime Health Cover policy. That can benefit many low income Australians in the meantime. And drive down private health insurance expenses by restoring Medibank Private to a 'not for profit' footing...

I wonder, do people like Tristan ever come out of the inner city chattering zone, & have a look at the real world? I wonder if he can do any arithmetic? Could he ever have looked at the deficit left us by the similar thinking of the high spending lefty governments, & still written this bit of fluff?

I'm a pensioner, but can still see the necessity for a small cost to help reduce the waste.

My mother had a monthly doctors appointment. She would get all dressed up, then the taxpayer funded assistance car & driver would arrive, take her to the doctor, wait for her, take her for a coffee, then bring her home. This was purely a social outing, paid for by the taxpayer. I know, as the doctor would ring me, to advise if any treatment was prescribed. In her 90s, mum was not reliable with her medical treatments.

That doctor is very popular with the older ladies, they look forward to his monthly chats. All very nice, but can we afford such waste?

While we are wasting huge amounts of the health budget on such social activities, even cancer sufferers are having to wait for treatment, due to budget restraints. So come on Tristan, do you want to reduce waste, or are social doctors visits more important than real treatment?

spending $6 to go to the doctor will be $6 less to spend in alcholol and cigarettes for many. A very healthy outcome.

Has-been;

Firstly: Terry Barnes - the author of the report himself - suggests excluding pensioners himself.

Secondly: Many doctors already charge on top of bulk billing - for a great many there is already a 'price signal'

Thirdly: If elderly pensioners lack social engagement - rather than begrudging them this - provide OTHER channels of social interaction - eg: dinners, discussion nights, movie nights etc. Social isolation of the vulnerable is a serious issue and needs to be addressed.

Fourth: You don't seem to have anything to say about making private health insurance affordable for low income Australians.

FINALLY: Improving pensions and providing tax breaks for low income Australians could be a way of protecting our vulnerable - and could be combined with a 'price signal'. (but remember that for many such a 'price signal' already exists.

According to a doctor friend of mine when Hawke introduced co-payments the number of visits by his patients dropped by a third. Nearly all were psuedo-patients like Has-been's mother. In his opinion it was one the best things that Hawke introduced while Prime Minister because he then had the time to concentrate on the truly sick. The removal of the co-payment by Keating was yet another stupid non-rational uneconomic decision by a Labor government.

All pension benefits should be means tested, and I speak as a pensioner myself

Means tests for pensions are fine - so long as they're fair.

You don't want (genuinely) middle class welfare. Though there are arguments for socialised health, and the highest quality public education; as well as public provision of transport and communications infrastructure etc.

I think as means tests stand now, though - While there are grossly unfair superannuation concessions which favour the wealthy - many part-self-funded-retirees, disability pensioners etc - face means tests which are arguably too steep....

BUT if we're talking about means tests for the Private Health Insurance Rebate - I have no problem with that. It could save hundreds of millions a year.

And again: if you want a co-payment - exclude the chronically ill; and increase pensions so you have your 'price signal' - but do not disadvantage those in need of care.

And in any case pensions are so threadbare that they all could well do with significant boost.

FINALLY: If there are people suffering social exclusion - including Aged Pensioners - then there is a need for social inclusion policies - Again including movie nights, and outings of various kinds.

Leaving aside for a moment the $6 surcharge, Mr Ewins, which has its good points and its bad, a couple of observations if I may on your views on the private health insurance system.

"The Conservatives' decision to remove means testing from the Private Health Insurance Rebate has also involved regressive distributive outcomes"

Interesting. As far as the internet tells me, means testing of the rebate has not been removed. Do you have a more accurate source?

"Dan Harrison of the Sydney Morning Herald has pointed out that abolishing the rebate entirely could save $3 billion."

This is his source:

"A Grattan Institute analysis... argues the Medicare levy surcharge and the lifetime cover policy would encourage people to keep their insurance."

The report doesn't seem to be available online, so I can't comment on the analysis itself. But it is a historical fact that following the rebate's introduction in 1999, participation in private health insurance rocketed up by close to 50%. The subsequent introduction of lifetime health cover hardly caused a blip, so would be a dangerous crutch for the system to fall back on. I'd call dodgy numbers on that information alone.

The lifetime loading is simply a mechanism to induce early participation, thus keeping overall costs low due to the lower average age. Removing it would be liable to increase costs while reducing revenue, which is not indicative of a healthy (sorry) business.

Which brings us to the key point in all this: private health insurance is a business like any other. It has revenue (premiums) and expenses (benefits). Any action to reduce revenue will also serve to reduce benefits, making the product increasingly unattractive.

The cost of those benefits, incidentally, is largely outside the control of the insurers, being dictated by the service providers (Ramsay, Resmed etc.) who perennially escape price scrutiny.

The present hybrid private/public system is not perfect, but any tinkering should be conducted with care. And if the public system were more robust (in its ability to absorb more people dependent upon it) there would be less to discuss.

Pericles it seems you're right that while Abbott plans to remove the means test "as soon as the budget is in surplus"; that has not yet happened yet. So as far as I'm aware the means tests still applies. Sorry that my facts weren't up to date.

Tristan it is time to grow up a bit mate. I have yet to see anything from you that doesn't call for more taxpayer spending.

Now any sane person knows we have to cut the deficit. We can't go on just blowing our debt until we can't afford to pay even the interest bill. A little look at the Mediterranean states should tell even you this.

Now a constricting suggestion. if you want to be taken seriously, the next time you tout more taxpayer spending, immediately after tell us what you propose to cut, in order to pay for your intended largess.

To help you get started a few suggestions. You could suggest we stop funding the so called public media. Perhaps a reduction of 50% in spending on those institutes of waste, the universities.

There are many things we could do, but one thing we can't, is spend any more money we don't have, on things we don't need.

Thanks for that Tristan Ewins...

>>So as far as I'm aware the means tests still applies.<<

...which blows your primary recommendation out of the water:

"Firstly, the means test on the Private Health Insurance Rebate needs to be restored."

Ahem. Moving on quickly...

The underlying reality is that the amount that an insurance company is able to pay out - any insurance, that is, not just private health - is governed by the amount of premiums received. In Australia, we have what is known as "community rating", which means that - unlike other insurances - the risk is assessed on the population as a whole. The theory is that you pay the same basic premium, for the same cover, as every other Australian, regardless of their health history.

True, there is an incentive to get on the train early to avoid the over-30 surcharge, but even this disappears after ten years. So the only remaining lever is tax, and as we now both know, the rebate is very much indexed, so that high earners get none, while low earners get the full 30% off - and 40% off for the elderly. Surely that situation meets with your approval?

This also puzzles me a little, reasoning-wise.

"...there is a convincing case to restore Medibank Private to a 'not for profit' footing."

Thereby reducing the current dividend of several hundred million a year back to the taxpayer, to zero. Why bother? Who benefits?

Then there's this:

"Privatisation of Medibank Private would undoubtedly cost consumers over the long run".

How so? You provide no justification for this bland assertion. Especially when you compound the confusion with this one...

"...a good portion of the Private Health Insurance Rebate is recouped when increasing numbers of health consumers choose Medibank Private for their health insurance policy"

How does that work, exactly? If you have a not-for-profit business, how does the consumer's choice "recoup" a rebate? And how would that work if rebate were to disappear?

It really doesn't seem that you have thought this through very much at all.

It's true that you can't have fully-fledged 'not for profit' and fully-fledged dividends to government at the same time.

But it IS ALSO true that if you privatise you lose BOTH options.

And if you do decide to accept dividends - even if you are MORE SO weighted towards a not-for-profit footing - then you will recoup some of what you lose via the Private Health Insurance Rebate.

Abbott's ultimate plan *is* still to abolish means testing.

And it is particularly onerous still for low income individuals and pensioners to afford private health insurance.

Again: Greater subsidies for low income citizens would result in a grater take up of private health insurance.

And the "Lifetime Health Cover" policy DOES effectively discriminate against low income individuals and families. Such people deserve both an amnesty and a higher subsidy.

You still seem to be struggling with the topic a little, Tristan Ewins.

>>It's true that you can't have fully-fledged 'not for profit' and fully-fledged dividends to government at the same time.<<

The words "fully-fledged" in the above nod to the facts are entirely redundant. A not-for-profit health fund does not have the ability to deliver dividends to anyone, at all.

>>But it IS ALSO true that if you privatise you lose BOTH options.<<

Absolutely. Instead, you have corporation tax.

>>And if you do decide to accept dividends - even if you are MORE SO weighted towards a not-for-profit footing - then you will recoup some of what you lose via the Private Health Insurance Rebate.<<

That's just semantics. The more "not-for-profit" is the entity, the lower will be the dividend. So which should have priority?

>>Abbott's ultimate plan *is* still to abolish means testing.<<

I actually doubt that. Once a government has its hands on a source of revenue (or in this case, a reduction in outgoings) it is more likely to cling onto it till hell freezes over. Idealism always has its limits, even for Liberals. The only scenario in which this is likely to occur is if the industry sees a massive exodus as a result of the rebate means-testing, in which case it moves up the priority list.

>>...it is particularly onerous still for low income individuals and pensioners to afford private health insurance.<<

Yep, but it is a discretionary purchase that very many of them feel is entirely worthwhile, given the state of the public system. At the last count there were 3.4 million Australians with private health insurance in a household earning less than $35,000 p.a.

http://www.privatehealthcareaustralia.org.au/news/media_releases/private-health-insurance-now-more-expensive/

>>Again: Greater subsidies for low income citizens would result in a grater take up of private health insurance.<<

True. But would not the same amount spent on prevention yield better results for all?

Were it up to me I would go back to the not-for-profit stance re: Medibank Private. That was the original rationale behind Medibank Private after all.

But I think were we to re-establish government business enterprises elsewhere would have to balance the two imperatives - enhanced competition and dividends directed towards progressive social purposes. (for instance if a public savings bank was re-established - many billions would likely be at stake every year)

I also reaffirm that I don't believe in a 'two tier health system'. That's always been the strongest argument against the rebate. But for those low income citizens who have a reason of their own for choosing private health insurance I believe they deserve a subsidy - if there is to be any subsidy at all. Though my policy would be to 'build up' public health to the point where many would eventually not see the point in private health insurance.

Yet Conservatives have long argued that increased private coverage is desirable. I'm not beyond pointing to their own arguments to overcome objections to increased private health insurance subsidies for the disadvantaged - during the interim period.

Tristan,

The medicare rebate was put in place to encourage people to take out private health insurance to encourage the use of private facilities and to take the pressure of public hospitals. This was extremely successful.

The proof of the pudding is that the means testing of this rebate has lead to a huge drop in private health cover, with the result is that the costs to the public hospitals have risen more than the "savings" gained by lessening the rebate.

The $3bn from removing the rebate would most likely add even more to the cost of public hospitals.

Shadow Minister:

Firstly to begin with we can re-impose the means test rather than utterly abolish the rebate. People on middle to upper incomes can afford private health insurance without a subsidy.

Thereafter if additional subsidies go to low income individuals and families - then that would be more likely to win new consumers over who could not afford it otherwise.

Finally: While the Private Health Insurance Rebate can conceivably lift pressure from public hospitals - it is on the basis of a two tiered system. Otherwise for many people there is no incentive... So the system we have now is about providing an incentive for private health insurance by providing a 'second tier' public health system.

So yes - investing resources in more hospital beds and more specialists would cost the budget bottom line. But in the final analysis there is no providing all Australians for medical care they NEED without a greater investment of resources. The same principle applies in Education... A two-tiered system offends against Australian egalitarianism.

Though there are some people who have had bad experiences with the public system - who are on lower incomes - and in the interim period (before public health deficiencies are fixed)- may want to take out private health insurance. These people deserve that choice.

Not necessarily the best plan any longer, Tristan Ewins.

>>Were it up to me I would go back to the not-for-profit stance re: Medibank Private.<<

This is, as we have noted before, an insurance business. What separates private health from other insurances is the relative ease with which the insurer itself can influence the level of claims against it. And hence, give them the ability to keep premiums under control.

Think of it this way. If you are insuring cars, you are heavily reliant on the legal system (speed limits, penalty-point systems etc.) to lower the overall risk of having to pay out. If you insure home-and-contents, you rely upon a level of policing and law enforcement to keep burglary statistics down. But with health, you are unilaterally able to institute programmes that actually lower the number of claims.

Disease management is becoming an important contributor to this initiative, as are "wellness" and "lifestyle" programmes.

http://www.digitaljournal.com/pr/1681608

But wait - these programmes require investment. And the money to implement them can come from two sources, the health insurer, or the government. Both, of course, are strongly motivated to reduce the cost of the health system. But quite frankly, I wouldn't trust a government department to do any more than spend years in pointless committees, determining the size and colour of the brochure.

With broader shareholder funding (or perhaps the deeper pockets of an overseas investor), Medibank could lead the way in this area. Investing in the future, it is called, and shareholders are far more likely than the government to soft-pedal the dividend for a few years while the necessary reorganizations and re-purposing of the business takes place, for the prospect of lower costs/higher profit margins in the future.

Premium costs are also kept down through competition. Having one organization commanding such a substantial marketshare AND being beholden only (and only indirectly, as the sole shareholder) to the government of the day, is not a healthy business environment.

Whoa there Tristan Ewins. We're going backwards...

>>Firstly to begin with we can re-impose the means test rather than utterly abolish the rebate.<<

I thought we had agreed that the means-testing is still in place, and doesn't require to be re-imposed? You can't just ignore facts like that while answering someone else's post, and think you can get away with it.

What you should have said in response to Shadow Minister's assertion...

>>... means testing of this rebate has lead to a huge drop in private health cover,<<

... is simply "rubbish". There has not been a drop in the number of Australians covered by private health insurance...

http://phiac.gov.au/wp-content/uploads/2013/11/QtrStats-Sep13.pdf

The numbers are still increasing, in fact.

But while I'm here I will take issue with this statement of oyurs:

>>I also reaffirm that I don't believe in a 'two tier health system'<<

Our system is not "two tier", since all services are available to all citizens. We have a hybrid system of a safety-net public health system (which is still one of the very best in the world) and a "user-pays" system of community risk-rated insurance allowing access to the private system.

>>Though my policy would be to 'build up' public health to the point where many would eventually not see the point in private health insurance.<<

Many have tried. All have failed. The reality is that any free system will suffer from wasteful use. If you then try to police it for over-servicing, you bring down the entire "free at the point of usage" edifice through costs spiralling out of control.

Health is one of the most critical political issues facing every country in the world. No-one has it "right", but the lessons being learned are extremely consistent: you will always have to have i) a system of self-insurance, and ii) a system of limiting access to the "free" components.

The comment about "a huge drop in private health cover" was Shadow Minister's; not mine.

But yes I did revert to my older assertion re: means testing.

A honest mistake.

But you can be certain it's still on Abbott's 'radar'; whenever it becomes practicable to implement.

I was aware of that, Tristan Ewins.

>>The comment about "a huge drop in private health cover" was Shadow Minister's; not mine.<<

But I was intrigued that you did not make even a passing comment on the other, more important issues.

>>...there is a convincing case to restore Medibank Private to a 'not for profit' footing<<

I pointed out how it is not feasible to return Medibank to its not-for-profit status, any more than it is reasonable to ask BUPA to relinquish its debt-funded structure, or persuade NIB to re-mutualize. Health care industries across the world have moved beyond the fix-it-when-broken model, to try and prevent the system eventually consuming our entire GDP. If you have some kind of magic dust that allows universal, free health care, you would do well to share it, as it's desirability is right up there with the philosopher's stone.

"Privatisation of Medibank Private would undoubtedly cost consumers over the long run".

You have still failed to present any rationale for this.

>>Again: Greater subsidies for low income citizens would result in a grater take up of private health insurance.<<

But, as I asked before, why would this be a better investment in health care than, say, disease management?

I'm beginning to get the impression that you believe that ideology trumps reality. When it comes to health care, it most assuredly does not.

Tristan,

Saving $2.4bn by means testing the health rebate, and spending an additional $4bn to cope with the additional demand on the public health service is only a "saving" to the mathematically impaired.

To avoid the additional tax levy, one only needs to take out hospital cover which covers only minor procedures and excludes expensive procedures, that the public sector provide free of charge. The all inclusive cover costs 3 times as much or roughly an additional $400p.m. for a family of 4. Most families have cut down their packages to make ends meet.

As private hospitals are more efficient (by about 25%) cost wise, it makes sense to all but the far left to spend less government money and get better services.

The point is that 'savings' and 'productivity' in health are counter-productive when the quality of service suffers as a consequence. What you pay for is what you get.

Actually Tristan, from the governments own estimates you get a lot more for the same money from the private sector than from the public sector, where the same procedure done in the public sector for say $10 000 costs $7 500 in the private sector.

So encouraging people to spend money in the private sector reduces the costs in the public sector by more than the incentive.

Shadow Minister,

"Actually Tristan, from the governments own estimates you get a lot more for the same money from the private sector than from the public sector, where the same procedure done in the public sector for say $10 000 costs $7 500 in the private sector.

So encouraging people to spend money in the private sector reduces the costs in the public sector by more than the incentive."

Firstly have a look at the cost of the Private for Profit American system.

Secondly whilst the figure you quote may apply to some procedures, it does not apply to the vast majority.

Whilst encouraging people to spend money to use the private sector does reduce cost to the public sector, it increases costs to the individual.

Subsequently a user of the Private Hospital system, can be tens of thousands of dollars out of pocket.

Take for example cardiac surgery, generally if you are well in the Public sector, you are transferred to the general ward the next day.

In the private sector, you can still be in intensive care, sitting up eating meals for a couple of days, before you are transferred to the general ward.

http://www.bmartin.cc/dissent/documents/health/sociopathy.html#Sociopathy

"Care and profit compete directly for the health care dollar and those who can bring themselves to compromise on care will be most profitable. This problem has been recognised for 2000 years. The system is very vulnerable for sociopaths to exploit. It is a set of fragile social structures which require constant identification and reinforcement, not only by the professions but by the larger society. In the past a cohesive community, strong professional associations and clear ethical systems have been moderately successful in controlling sociopathic tendencies."

This website has numerous arguments against the Private for Profit Hospital system.

Sure no health care system is perfect, and funding by either taxation or insurance premiums.

So who's personal well-being is being offered as a sacrifice while the Government work on not only getting rid of their deficit, but building a healthy surplus? Oh, of course, the lower end of the scale and medicare. As, I believe the Rudd Abbott combined deficit is $50bn this year. $40bn when Abbott took over, growing to $50bn within one hundred days. The addition to the Medicare levy will remain, and a healthy surplus well. No comment.
Reducing the welfare bill, namely Newstart and Disability. I hope they are referring to those claiming the dole unnecessary or fraudulently. A review of disability recipients, targeting short term support who may be fit for work. Permanent disability recipients should be safe as it speaks for itself.
If their intention is to implement, across the board cuts, to both areas, they are pathetic, lazy excuses.
Pollie- Cassie McGannon suggests 'it is short sighted to not include Aged Pensioners as some are very wealthy and even have half a million in assets. Ok target those who are obtaining benefits fraudulently. As for those with half million dollar assets, which you would assume they possessed at retirement age, what? Assets, being their home, one maybe two cars, and furnishings? Theirs through hard work. Cassie McGannon stooping real low. Not an option.
Oh yes there was mention of getting rid of the 'milti millionaires' welfare/hand out. Does this exist and if so what thoughtless idiot would have any involvement in a ridiculous scandal. Please be false.
This all gives me the s..ts and yet I persist.
How about all the pollies get targeted for a bloody change. Im sure if they looked really hard there could be cuts made somewhere in their more than ample earnings.

<As private hospitals are more efficient (by about 25%) cost wise, it makes sense to all but the <far left to spend less government money and get better services.
<Posted by Shadow Minister, Thursday, 16 January 2014 3:03:54 PM

Where is the evidence for this?

There have already been fail experiments "Port MacQuarie, Sunbury where private operators were put in charge of running public hospitals in the belief that it was cheaper, only for the same hospitals to require bailing packages.

http://www.bmartin.cc/dissent/documents/health/privat_aus_states.html

I have additional information on old computer files.

<Efficiency and Costs:- As Lawrence has shown in a recent paper the costs of private care in <Australia are greater than that in the public system. This is despite the fact that the public <system treats sicker people, with a comparable complication rate. In their study of available <data in Australia Duckett and Jackson concluded that "care in the public sector is provided at <higher levels of technical, allocative and dynamic efficiency than in the private sector".

[see Dr Carmen Lawrence, MHR. "Shortcomings in the Howard government's private health insurance incentives bill" (1998)
Duckett S J & Jackson T J Med J Australia 1/5/2000 Vol 172 p439-42]
http://www.uow.edu.au/~bmartin/dissent/documents/health/comp_effic.html

Anyone who supports the idea of private being more efficient and cost effective, either has substantial share holdings or stands to gain an enormous amount from such an idea.

We only need to look at what has happened to energy prices in Australia, and the idea that competition keeps prices down is down right delusion.

Wolly,

The American system is a mess largely due to the screeds of regulations imposed by successive federal snd state democratic governments which mean that more than 50% of the medical dollar is spend in administration costs. Comparing Aus to the US is as silly as comparing it to the socialist Greek medical system.

The reality is that the private sector in Australia provides similar services at about 75% of the cost of the state run hospitals, and the stupid cuts in private health subsidy hurts everyone

Just to be clear, Shadow Minister.

>>... means testing of this rebate has lead to a huge drop in private health cover<<

As I pointed out to Tristan Ewins, this is simply not the case.

There has not been a drop in the number of Australians covered by private health insurance...

http://phiac.gov.au/wp-content/uploads/2013/11/QtrStats-Sep13.pdf

The numbers are still increasing, in fact.

>>... the stupid cuts in private health subsidy hurts [sic] everyone<<

The major "cuts" have been means-test related, and seem to have caused little, if any, downward pressure on the cohort of private health insurance users. Sure, there is evidence of "downsizing", in that people are taking more notice of what exactly they are covered for. But this is ultimately a healthy attitude.

There has been a recent move towards indexation of the rebate, but that is likely to have a negligible impact also, as it is talking a small number of dollars for one particular segment.

I am very much in favour of the continuing viability of the private health system, and the insurance industry that supports it. Simply bandying about partisan party-politically-motivated slogans does not help this one little bit.

Pericles,

If you had bothered to read my first post, I have never claimed that less people are covered, but that people are cutting back dramatically on their health cover. This removes the cover on most major illnesses such as heart, cancer, diabetes that are very expensive, and pushes these people back onto the public purse, with a net savings to the taxpayer of zero or worse.

Just look at any basic private health cover that is just sufficient to avoid the tax penalty, and you will see that it excludes a hell of a lot.

<The reality is that the private sector in Australia provides similar services at about 75% of the cost of the state run hospitals, and the stupid cuts in private health subsidy hurts everyone
<Posted by Shadow Minister, Friday, 24 January 2014 8:48:06 AM

Again where is the evidence for this?

Did you not read the Carman Lawernce reference?

A friend of mine was treated for Prostate cancer in the private system and he was left around 20k out of pocket, so how is this cheaper than the public system?

Shadow Minister.

>>If you had bothered to read my first post, I have never claimed that less people are covered, but that people are cutting back dramatically on their health cover.<<

“Dramatically”, Shadow Minister?

>>The proof of the pudding is that the means testing of this rebate has lead [sic] to a huge drop in private health cover<<

"Huge"?

Emotive stuff. And totally without foundation. Which is why I called you on it.

Here are some stats provided by the PHA, the industry body for health insurers:

"743,732 policies have been downgraded or discontinued since February 2012, representing 12.5% of all private health insurance policies (includes hospital and general treatment). A downgrade refers to a member changing their health insurance product to one with an excess or exclusions where these were not part of their previous policy, or to a less expensive alternative product. A discontinued policy is one which has been terminated."

http://www.privatehealthcareaustralia.org.au/news/stats_and_data/privately-insured-downgrade-their-cover/

The devil is, as always, in the detail. First, let's separate out discontinuances that are the result of natural attrition, so that we can remove the implcation that these are caused by messing about with the rebate

Natural attrition runs at an annual rate of around 5%. So the figure you might normally expect for policy discontinuances between February 2012 and August 2013 (when the article was written) is 7.5%.

So normal-rate lapses alone represent a full sixty percent of the 743,732 "downgrades or discontinuances". That leaves fewer than 300,000 "downgrades and discontinuances" potentially caused by the rebate changes.

Note also that by lumping together excess and exclusions, PHA has conflated two different types of change: one is a reduction in cover, which you focus on, the other an increase in excess, which is a voluntary out-of-pocket per-incident payment that reduces the monthly premium. Same cover, note, so no increased burden on the state system.

Oh yes. The stats also include downgrades to “general treatment”. Which, if you look at it closely, is more a savings-scheme for visits to the dentist than risk-based insurance cover.

Let's at least keep some perspective, eh?

Pericles,

You can't be selective in your maths. For the 5% attrition, there is a roughly 5% or greater uptake in policies, and the article shows that the growth in policies is almost exclusively made up of policies with high restrictions and excesses (ie just enough to avoid the tax hit) this adds more than 400 000 to your figure. In addition, these figures do not take into account many people are slow to change and this is far from the final number.

As the rebate was targeted to about 1 million policies to save about $600m p.a. a reduction in spend per month of $70 per policy (of the 700k) wipes out all the government savings.

That's voodoo maths, Shadow Minister.

>>Pericles, You can't be selective in your maths. For the 5% attrition, there is a roughly 5% or greater uptake in policies<<

Agreed. That's why the total covered population continues to grow - more people join than leave.

>>...the growth in policies is almost exclusively made up of policies with high restrictions and excesses (ie just enough to avoid the tax hit) this adds more than 400 000 to your figure.<<

Whether or not the first part of this is true (and the article does not use the word "exclusively"), where do these extra 400,000 people come from? The total figure is 743,732 "downgrades or discontinuances", from which I abstracted the normal level of discontinuances, simply to point out that these people would have gone anyway. Quite a lot of them having fallen off the twig, actually.

So please explain again where you found these additional 400,000 policies. Otherwise, folk might think you're being "seelective in your maths".

P,

Pity you don't have the horse power to do the maths without someone helping you join the dots.

Look at ratio of policies to people covered

Look at increase in policies with exclusions and without exclusions and extrapolate the difference between the previous ratio.

Et voilà, you get the answer. As this is not exact, I used the term "about"

You are still missing the entire point, Shadow Minister. The only question is whether you are doing so on purpose, or are doing it unwittingly.

We have already established that there are fewer than 300,000 policies, over a period of eighteen months, that come under the heading "downgrades or unexpected discontinuances".

What we don't know from these numbers is how many there are in each of these categories.

What we also don't know from these numbers is how many refer to an increase in excess payment, rather than a reduction in cover, since they are lumped together.

What we also don't know from these numbers is how many refer to a reduction in cover for general treatment (which most people know as "Extras"), rather than hospital cover, since they are also lumped into the PHA statistics.

So, for all we know, the entire "downgrade" category could consist of policyholders increasing their excess payment from $250 to $500 (without affecting their cover in any way), and/or reducing the benefit they receive on Remedial Massage from $500 p.a. to $250 p.a.

It was for this reason that I questioned your conclusion that people are "cutting back dramatically", and that there has been a "huge drop in private health cover" as a consequence of means-testing.

Careless use of statistics does direct damage to the insurers, by undermining the credibility of their product in the eyes of the consumer.

The PHA bears some of the blame for your mistakes, though, as they are guilty of the fudging of those statistics, by conflating a number of highly disparate categories.

You may possibly be ignorant of the features of a health insurance policy, of course, in which case you may be excused some of the overheated language. But the reality is that there is little evidence yet that "people are cutting back dramatically on their health cover", or that "this rebate has lead [sic] to a huge drop in private health cover"

Until there is, for your credibility's sake, keep your powder dry.

Pericles,

Your figure of 300 000 policies is not "established" as it hinges entirely on an attrition rate of 5% to remove most of the downgrades for which you have not offered one iota of evidence.

Secondly, as the removal of the rebate only covered about 1m policies, and only kicked in in July 2012, the reduction of 30% of the affected policies in only 13 months is dramatic. If you combine this with the fact that almost all new policies being taken out are reduced, the message is getting through.

As for amounts trimmed per policy, the 1m affected are most likely to be established earners with families, for whom a high level policy jumped from about $400 p.m. to $$650 p.m. Many of them would have reviewed the policies and trimmed out the fat, and options we were no longer likely to use, and (like I did) reduce the value of the policy by about $2500 p.a. While this is unlikely to be the norm, it is far more tenable than the $250 p.a. reduction that you laughably proffered.

The 300 000 policies reduced plus virtually all new policies being reduced means that what has occurred in the first 13 months of the policy being introduced is not the end of it. By August 2013 the likely loss of PHI premiums most likely well exceeded 50% of the "savings" and by world wide trends is likely to exceed them in the short term.

The private health system estimated based on Australian and other countries take ups of subsidized health care that a reduction of $600m p.a. in subsidies would reduce contributions by about $950m p.a. Much of which would then fall on the public hospitals to provide.

At the time the savings would accrue to the federal labor government, and the costs to the state liberal governments.

I think we're making progress here, Shadow Minister.

>>Your figure of 300 000 policies is not "established" as it hinges entirely on an attrition rate of 5% to remove most of the downgrades for which you have not offered one iota of evidence.<<

Quite true, I haven't.

But only because I assumed that you knew that industry-wide, this is actually at the low end of the scale. Start with the NIB investor presentation set that they publish on their web site. There you will find that they experience lapse rate as follows:

2007: 7.7%
2008: 9.4%
2009: 8.6%
2010: 8.9%
2011: 9.0%
2012: 9.8%

Of course, if you prefer to assert that my figure of 5% was too low, be my guest.

Understandably perhaps, in the circumstances, you prefer to present your arguments in terms of speculation.

>>...the 1m affected are most likely to be...<<
>>...Many of them would have...<<
>>...While this is unlikely...<<
>>... the likely loss of PHI premiums most likely well exceeded...<<
>>...by world wide trends is likely to exceed...<<
>>...estimated...would reduce...would then fall...would accrue...<<

The CEO of NIB also disagrees with you, but for a completely different reason:

"Mr Fitzgibbon said he believed it was fair to means-test the rebate and suggested it 'sets a precedent' for the Coalition to scale back Medicare. 'I strongly think government should means-test Medicare,' he said. 'Why are we still giving free healthcare … to wealthy people?'... Mr Fitzgibbon said the private health insurance industry suffered from a rent-seeking mentality. 'We don't need [means testing] to increase participation,' he said. 'This industry increasingly has to stand on its own two feet.'"

http://www.smh.com.au/national/medibank-nib-not-buying-coalitions-pledge-to-scrap-means-testing-20140124-31e88.html#ixzz2rXlZkMOQ

Interesting call. Increase the cost of your competition in order to make your own product more attractive.

Pericles,

Those actually are the figures that I saw which indicates that the attrition rate would be about 15% over 18 months indicating either that
a) increased premiums encouraged not to change their policies or more likely
b)the article has already compensated for natural attrition.

Either way the 5% was chosen simply to make your argument and your calculations are complete bollocks.

The point I was trying to make is that the left whingers are trying to claim that the reduction in subsidies are "savings" with no consequences. The whole reason that the subsidy was introduced is the world wide experience that the take up of private insurance reduced the load on public hospitals by significantly more than the cost of the subsidy. The experience over the last decade in Aus confirms this.

The assumption that removing subsidies would reverse this trend (in the long term) is rational and according to the health insurers is already happening.

That is quite nonsensical, Shadow Minister.

>>Either way the 5% was chosen simply to make your argument and your calculations are complete bollocks.<<

If I had chosen across-the-board 9% (making 13.5% over 18 months) then natural attrition would have accounted for every one of the "743,732 policies [that] have been downgraded or discontinued since February 2012", leaving precisely none to be attributed to policy changes. I doubt whether you or anyone in the industry would have accepted that.

And this is even more through-the-looking-glass:

>>Those actually are the figures that I saw which indicates that the attrition rate would be about 15% over 18 months indicating either that
a) increased premiums encouraged not to change their policies or more likely
b)the article has already compensated for natural attrition.<<

In which universe of logic do you find "increased premiums encouraged not to change their policies". If you check the Economics 101 supply and demand curves found in our own universe, you will find that an increase in premiums is more likely to cause people to drop their policies.

As for b), the article clearly states "743,732 policies have been downgraded or discontinued since February 2012". Note carefully the word "discontinued" in the sentence, and explain how it can be stretched to mean "excluding those discontinued through natural attrition". I mean, how would they know?

There is no doubt that reducing the rebate has the potential to contribute to lower usage.

>>The assumption that removing subsidies would reverse this trend (in the long term) is rational and according to the health insurers is already happening.<<

But there are many other factors at work. One is simply the fact that the means-testing kicks in at a reasonably high rate; folk in that category have more motivation than most to choose the private health system, if they are able.

As for the "it is already happening" malarkey, they have been saying the same thing for years. And every year, more people take out a policy. They'd be smart, this time, to wait until the numbers actually fall, before they cry wolf.

"In which universe of logic do you find "increased premiums encouraged not to change their policies".

Actually precisely my point. 9% attrition rate (or higher for 2012) over 18 months gives an attrition of about 13.5% by your logic implies that the higher premiums encouraged a higher take up. This is nonsensical which is why option b) is the only viable alternative.

The 5% attrition rate is nothing I have seen from any company, and thus can only be fabricated by you. That all the rest of your assumptions have no foundation leads to the only conclusion that your calculations are entirely bogus.

While there are some families that can happily absorb a premium increase of $2500 p.a. the majority will take steps to reduce it.

The ratio where about $1.50 is invested in health insurance for every $1 of subsidy is the most likely predictor for the future.

It doesn't work that way, Shadow Minister.

>> 9% attrition rate (or higher for 2012) over 18 months gives an attrition of about 13.5% by your logic implies that the higher premiums encouraged a higher take up... The 5% attrition rate is nothing I have seen from any company, and thus can only be fabricated by you<<

You are making the assumption that NIB's attrition rate is the industry benchmark. Which it isn't. The average across all funds is lower, which is why I chose a lower figure. If you know a more accurate number,feel free to plug it into the equation. It won't make a jot of difference to the fact that a) the classifications (downgrades and discontinuances) are jumbled together, b) excess and fewer benefits are lumped together and c) hospital and general benefits are all mixed in, making any accurate assessment of the actual situation impossible.

You are simply making your usual political statement, Libs = good, Lab = Bad, ignoring any inconvenient facts along the way.

P,

I had a look at a few, and did not find any below 6.5%, certainly not in 2012. As far as the Labor/lib factor, that is just another red herring.

I enjoy debating policy but hate being lied to. Saving $600m p.a. is an admirable goal. If labor tried to quantify the consequences, and argue the merits it would be one thing, but pretending that there are no consequences, as Labor did is lying.