Dan Tehan (Wannon, Liberal Party, Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Private Health Insurance Amendment (Income Thresholds) Bill 2021 implements a measure announced in the 2021-22 budget. It will provide continuity for the current policy settings by continuing the pause on the indexation arrangements for income thresholds in the Private Health Insurance Act 2007 for a further two years, and updates the indexation arrangements to apply to the current thresholds from 2023-24. The income thresholds contained in the Private Health Insurance Act 2007 are used in determining the tiers for both the private health insurance rebate and the Medicare levy surcharge. The rebate and surcharge will continue to be income tested.

The government invests over $6 billion each year in the private health insurance rebate which contributes to the affordability of private health insurance for Australians. Following significant reforms over recent years which have made private health insurance simpler and more affordable, the 2021-22 budget sees the Australian government continuing to increase overall spending and investment in health. This includes investing in ongoing reforms to private health insurance which to date have resulted in the lowest annual average premium change for consumers since 2001—2.74 per cent. Specifically in the 2021-22 budget the government is investing $30.6 million over four years to continue to make private health insurance simpler and more affordable for Australians.

Australians continue to rate the quality of health care available in our country at near record high levels but are concerned about the system becoming overstretched. Private health insurance continues to be viewed by Australians as a vital element of the health system, providing choice and helping to relieve pressure on the public system.

The bill supports ongoing reforms in private health insurance. More than half of the Australian population have some form of private health insurance. Income-tested rebate arrangements are a foundation stone of these arrangements and continue under this legislation.

The bill preserves the explicit link between the rebate and the Medicare levy surcharge. It makes no changes to the Medicare levy surcharge rate or the private health insurance rebate rates. This is important as they operate together to ensure that people whose rebates are reduced because of means testing continue to have a strong incentive to retain their private health insurance.

It is important to note that these changes over the next two years will not affect individuals with an income that remains below current base tier thresholds of $90,000, or couples and families with an income that remains $180,000 or below. Higher income earners without private health insurance will continue to be subject to the Medicare levy surcharge.

Importantly the bill will ensure the recommencement of annual indexation from the current income thresholds following the end of the pause, which is important for the continuity of policy settings and predictability for government financing.

This bill provides stability regarding access to the private health insurance rebate and application of the Medicare levy surcharge. During this pause the government will undertake a detailed study into the settings of these two important private health insurance policies to ensure they provide the appropriate incentives for individuals, couples and families when choosing the healthcare cover that best suits their circumstances.

Debate adjourned.