Media releases

April 7, 2003

30% Rebate reinforces benefits to Australia's health system

An academic report has found that the Federal Government's. 30% private health insurance rebate could be saving the Australian taxpayer $2 billion a year in health costs.

The independent report, prepared by Professor Ian Harper of Harper Associates and the Melbourne Business School, was commissioned by Medibank Private.

The report entitled 'Preserving Choice - A Defence of Public Support for Private Health Care Funding in Australia' outlines the contribution of the 30% Private Health Insurance Rebate to the complementary system of public and private health care within Australia.

As the nation's largest Private Health Insurance fund, Medibank Private commissioned the research in the interest of gaining an understanding of the economic benefits of the 30% Private Health Insurance Rebate on Australia's public health system.

Medibank Private Managing Director, George Savvides, said the report reinforced economic arguments supporting the 30% Rebate, beyond the clear benefits to consumers of private health insurance cover, by way of a substantial reduction in premiums.

"Our members tell us that the 30% Rebate makes an important contribution to the affordability of their private health care. This independent research provides valuable insight into the contribution of the 30% Rebate on Australia's health system for both taxpayers and consumers", Mr Savvides said.

For example, the 30% Rebate offers an annual saving of approximately $700 to a family on Medibank Private's Blue Ribbon Hospital cover, and $900 off the most widely held Advantage Plus hospital and extras cover. (*Based on NSW prices from 31 March 2003)

"The findings of the report have underlined the significant economic and consumer benefits of the 30% Private Health Insurance Rebate", Mr Savvides said.

Professor Harper said: "The report found that if the procedures performed in the private hospital system within Australia in 2000/01 were to be transferred to the public hospital system, it would be at a cost of $4.3 billion. This is effectively double the figure of the 30% Rebate, which currently costs the Australian taxpayers $2.2 billion annually."

The report has also highlighted the value of choice that private health insurance offers to consumers in having greater control over access and treatment options, quality through improved facilities and a level of protection against unexpected hospital expenses.

"If private health insurance were to disappear, the cost of providing public hospital treatment to all who were not prepared to pay directly for private hospital treatment would escalate dramatically", Professor Harper said.

Key findings of the report included:

  • The existence of private health insurance allows those who value keeping their options open in health care to subsidise the overall health care capacity in Australia;
  • The additional resources contributed by those Australians who pay for the option of using either private or public system help to keep the average cost of health care down in both the public and private systems;
  • In 2000/01 alone, private hospitals in Australia performed procedures which it would have cost the public hospital system around $4.3 billion to perform; and
  • The recent reforms to private health insurance have helped address the topsy-turvy nature of the Australian health insurance system - bringing it more into line with the principle of community rating - by making it more likely that the healthy compensate the sick, rather than the other way around which is the conventional basis of recruiting membership into an insurance pool.
For more information, please download .pdf versions of the executive summary and full report:

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