Medicare 'rebalance' hits higher income earners

Benefits for the well-off have been cut and a razor has been taken to doctors' Medicare payments in what the Government has called a "rebalancing" of Medicare and private health insurance.

And Medibank Private will be raided for its profits in a move explained as "ensuring competitive neutrality in the private health insurance market".

As anticipated in pre-budget leaks, the private health insurance rebate will be means-tested, on a sliding scale.

Singles earning more than $75,000 and couples earning more than $150,000 will have to pay more for health insurance, saving the Government $1.9 billion over four years. Individuals earning more than $120,000 will get no government rebate at all.

For these income brackets, the shrinking carrot also comes with a bigger stick - an increase in the tax paid for those without private insurance: the Medicare levy surcharge.

Treasury modelling predicts the combined carrot-and-stick measures will mean 99.7 per cent of those currently insured privately will keep their policies.

This prediction will be used to counter claims by health insurers that the changes will push more people on to public hospital waiting lists, and cause faster premium rises.

As reported by The Age last week, the budget also places new caveats on the Medicare safety net, which protects chronically ill people from high health costs.

The Government says it has evidence that specialists are charging excessive fees when they know their patients are protected by the safety net. Figures show the top 10 per cent of obstetricians were getting an average $612,000 each in safety net payments every year.

The top 10 per cent of IVF specialists were doing even better, getting an average $2.2 million each a year through the safety net.

From January next year, there will be a new cap on safety net payments in areas such as obstetrics, IVF, cataract operations, hair transplants for alopecia and varicose vein treatments.

The caps will save $452 million over four years, after an increase in the scheduled fee paid for obstetric services.

The budget also saves $153.4 million over four years by cutting some Medicare fees paid to doctors that the Government has decided are too high.

For example, the scheduled fee for cataract surgery, $700, was set at a time when the procedure took three times longer than the current operation.

In a budget surprise, health insurer Medibank Private will be made a for-profit organisation, paying dividends to the Government.

The Government would not reveal how much it intends to claw back from Medibank Private, citing commercial confidentiality, however, the amount is expected to be about half of after-tax profits; about $65 million last year, and $100 million the year before.

The Government says it will not raid the company's $1.4 billion cash reserve, only taking money from future profits.

It obtained a guarantee from the Medibank board that the transition would not affect premiums or employee conditions.

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