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?