Submission to the Senate Community Affairs Legislation Committee

This submission addresses the elimination of the increased subsidy for people over 65 who have private health insurance. It raises issues about how we give effect to solidarity between generations.

There is not a free market in private health insurance. It is regulated in ways which force some people in the population to subsidise others heavily. In this respect, it is quite unlike any other form of insurance. While the Government may want to find savings, it should be concerned about intergenerational equity, especially for those over 65 who have spent long periods of their adult lives subsidising others as the regulatory framework requires. If this Bill passes, older people will now receive no additional help to pay their premiums at a time in their lives when their risk of serious health problems has increased substantially, while their income from paid work has typically dropped to zero. Affordability is a major issue for retired people, not least because they may need to increase their hospital cover to the highest level to address an increased likelihood of age-related health problems. Their premiums are highest at the time when their income is lowest.

Through its tiered subsidies or rebates for private health insurance, the Government recognises that some people can afford more than others and so should pay more. There are better ways to achieve savings in the level of government subsidy for private health insurance premiums, than to reduce the level of support for the people who can least afford it while making no changes to the level of subsidy for those who can most afford it.