Roxon hits 'monster' health bill

HEALTH Minister Nicola Roxon has launched a fierce attack on health funds, accusing them of putting profits ahead of patients and describing the $5.1 billion health fund rebate as a ''financial monster''.

Ms Roxon has stepped up the campaign against the funds - which she likened to the Liberal Party - as the government prepares to reintroduce its ill-fated health insurance means tests measures which were budgeted to reap $2.9 billion in savings for the government over four years.

But these savings now appear in jeopardy as the government struggles to secure the vital support of independent MPs Tony Windsor and Rob Oakeshott.

Ms Roxon will tell a conference of the Australian Healthcare and Hospitals Association in Melbourne today that unless the savings to the cost of the rebate can be made, Australia faced a $100 billion budget ''hole'' over the next 40 years that would require savings elsewhere in the health system.

''We are battling big corporate interests which - much like the Liberal Party - are putting their short-term gains ahead of what is right and necessary for patients and families into the future,'' Ms Roxon said.

''Frankly, no one benefits if the private health insurance rebate becomes such a financial monster that much more drastic action has to be taken by a future government.

''Our policy would reduce government subsidies for high-income earners, and increase the penalty if they opt not to take out insurance. This ensures that most of those high-income earners will still opt to stay in.''

For low and middle-income earners, nearly 8 million people, the existing 30, 35 and 40 per cent rebates would remain in place. ''The result will be that the largest benefits are provided to those on lower incomes - which is and should be the principle underpinning Australia's tax and welfare systems.''

The reforms would not result in a damaging exodus from private health cover as Treasury estimates, supported by private research suggesting that just 0.3 per cent of people with hospital cover were likely to drop it if the legislation was passed.

Her comments to a conference representing the public hospital system come after months of warfare with the health funds, which have played an influential role in lobbying wavering MPs and publishing reports challenging the government's figures.

Despite earlier claims that previous measures by the government to reduce health incentives would reduce membership numbers, health funds are experiencing strong financial results. The government-owned Medibank Private recently announced a record $300 million profit and last financial year collected $4.7 billion in premiums, about $1.4 billion of which is from the 30 per cent rebate paid by the government.

The rebate is the fastest-growing component of the health portfolio, Ms Roxon says, having grown by an average of 10 per cent a year in the past decade.

The government has argued that its plans to means test the 30 per cent rebate on health fund premiums would not affect three-quarters of policy holders.

The rebate begins to phase out for singles earning $80,000 and families on $160,000 and is withdrawn completely for families earning more than $248,000 a year or for singles on over $124,000.