However, our study suggests that higher reimbursements for seniors aged 65 and over aren’t doing much to incentivize them to sign up for private hospital coverage, which is the group that might benefit the biggest from this.
This, as well as other studies, suggests that these rebates are being mainly given to those with more money, who are more likely to take out health insurance on their own.
Read more: The private health insurance rebate has cost taxpayers $100 billion and only benefits some. Should we scrap it?
Remind me, what are these rebates?
1999 was the year that 1999 1999, the Australian government announced the rebate for private health insurance. In the beginning, the rebate was the government was paying 30 percent of the cost of private health insurance for all regardless of the amount of income or. In 2005 the Howard government raised the rate of rebate by 35% to people aged 65-69, and 40% for those 70 or older regardless of what they made.
As time has passed, rebate rates have slowed and are now based on income and the age of the person. However, the larger discount for those over 65 has been the same.
We wanted to know if the higher rates for elderly people actually motivate people to purchase health insurance.
We analyzed data from over 300,000 taxpayers who had filed tax returns for more than 10 years (2001-2012). Then we compared trends in the insurance coverage of those who were younger than 65 as well as those older than 65 years old, prior to and after the rebate policy modification.
Read more: Private health insurance is set for a shake-up. But asking people to pay more for policies they don’t want isn’t the answer
What we found
Higher rebates have resulted in a slight temporary increase in the amount of private health insurance taken. We estimated that cutting down premiums by 10% with increased rebates will only result in a 1-2% increase in those aged 65 and over purchasing health insurance through private companies in the coming two years.
This means that higher premiums for those who are elderly can be very costly to make sure they are insured.
The 65-74 age group with the lowest earnings, less than the lowest 25 percent of earners, were most likely to purchase insurance as a result of more generous rebates, which decreased premiums. That’s a salary of less than $21,848 in current dollars (income has increased to the 2023 dollar amount, which is consistent in line with cost of living index).
What are we proposing?
Our research suggests that a specific subsidy program is the most effective method to boost the amount of the amount of private insurance for health. To accomplish this, we suggest the reduction of income thresholds for rebates in order to focus on individuals of all ages with real poor incomes.
Today, individuals with a salary of up to $144,400 (singles) (singles) or $288,000 (families) are eligible for rebates.
Additional evidence supporting our idea is research that was released earlier in the year. This suggests that people with higher incomes are more likely to take out private insurance, regardless of rebates.
A recent consultative report that was commissioned by the Health Department of the federal government looked at the various health insurance incentive programs.
This report recommends the removal of rebates for individuals with income that is higher than $108,000 for individuals as well as $216,000 for family members (we suggest removing them with a minimum of $93000 for singles and the family rate of $186,000). The report also indicates an increase in rebates for those who are older than 65 (we believe that income is more important than age and is a better indicator of a person’s income).
Low-income people ought to be targeted instead. Shutterstock
Are rebates worth the cost?
Also, we must examine whether rebates offer the most value for money in a wider sense and over all ages.
The evidence available suggests that an increase of 10% in premiums due to rebates can result in a 3.5-5 percentage increase in the number of people who have health insurance for all Australians. The evidence shows that this is only 1-2 percent for those over 65.
Thus, rebates could burden taxpayers with more than they create in savings. They generally wind down to people who would be insured privately even if they have a better financial situation.
