The idea that this is only a slug on insurers and not the insured is an equally dubious claim. Private Health Australia, the lobby group representing the insurers, asserts that the move will increase premiums by $156 per year for families with two adults. Obviously, this would only occur if the cost in its entirety is passed on to the insured patient.
In our cost-of-living crisis, the response of governments – state and federal – is to avoid looking at their own rapacious spending and look for boogie-men from the world of big business. Clearly the Minns government is banking on patients to blame their private health insurers, and not the government, for this charge.
This bet might backfire on federal Labor. Nearly two-thirds of people with health insurance in NSW earn less than $90,000 annually, with 38 per cent earning less than $50,000. These are the very people who are already making significant sacrifices – cutting back on essentials such as food and petrol– to afford private health insurance.
They also live in marginal federal electorates in west and south-west Sydney and are aspirational voters for whom private health insurance is not simply a tax strategy, but represents a strong desire to give their families the best health options possible.
Voters will be confused by the conflicting logic between the state levy and federal taxation policy. Since 1997, the federal government has actively encouraged Australians to take up private health insurance through measures such as the Medicare Levy Surcharge, which penalises those without private coverage.
The NSW government is effectively penalising those who hold private health insurance. This is an incoherent approach, in which citizens are levied for holding private health insurance at state level and face penalties for not holding it at federal level.
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Now that NSW has taken this step, other states might follow suit, as revenue-raising measures tend to spread in Australia’s federal system. Victoria, for instance, could be next in line to impose a similar levy, particularly if it observes the revenue windfall the NSW government expects to gain from this move. This domino effect could erode the affordability and accessibility of private health insurance across Australia, with long-term consequences for the entire healthcare sector.
This represents a dismal piece of policymaking from both Coalition and Labor NSW governments. It’s based on improbable statistics and a desire to penalise private insurers and, by definition, their insured patients. The federal government, particularly Treasurer Jim Chalmers and Health Minister Mark Butler, should have intervened to prevent this measure from progressing. Their silence in this case is equally troubling.
Dr Nick Coatsworth is a health policy expert and Nine Network’s medical contributor.
