Budget tipped to slash health rebates for high and middle income earners

Federal Treasurer Wayne Swan looks set to target high and middle income earners further in next week’s federal budget by slashing private health care rebates for singles earning more than $74,000 and couples earning over $150,000.

According to a report in The Australian, the 30% private healthcare rebate will be scaled back dramatically in a bid to help close the $70 billion deficit in the budget.

The report suggests the rebate will fall from 30% to 20% for couples earning $74,000 and $90,000 a year and couples earning $150,000 to $180,000.

The rebate will drop to 10% for singles earning between $90,000 and $120,000 and couples earning between $180,000 and $240,000.

For singles earning more than $120,000 and couples earning more than $240,000, there will be no rebate.

And high income earners who think they can avoid taking out private health insurance should think again – the report suggests Swan will lift the Medicare rebate for high income earners from 1% to between 1.25% and 1.5%.

It is believed that the changes will help save $1.9 billion in the first three years and $8.7 billion between now and 2019-20.

But there is already criticism of the changes, with independent Senator Nick Xenophon saying he would consider blocking any such proposal in the Senate. He described the proposal as “a significant breach of trust” as the Government had promised to retain the rebate.

“The Government doesn’t know whether it’s Arthur or Martha on this. One minute they’re saying they’re changing the (Medicare levy surcharge) threshold, giving people an incentive to drop private health insurance, and now they’re raising the levy surcharge to keep people in,” Xenophon said this morning.

While Prime Minister Kevin Rudd has promised to keep his promise to reduce tax rates for high and middle income earners, it appears these gains will be eaten up by changes to health, welfare and superannuation rules for the wealthy.