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.