Insurance

5 Lakh Australians to Dump Health Cover

Almost 5,00,000 Australians will dump private health insurance after new laws, designed to ease the tax burden on families, passed through Australia's parliament. The changes have angered the industry and weighed down on the shares of Australia's top private hospital operators Ramsay Health Care Limited and Healthscope Limited and on private health insurance fund NIB Holdings Limited.

The new laws, first proposed in the center-left Government's May budget, were passed in parliament on after Health Minister watered down the changes to win support in the upper house Senate. "The projection of the number of people from treasury that will drop out of health insurance is just under half a million, 492,000 people," said Nicola Roxon, Health Minister, Australia.

About 10 million of Australia's 21 million people currently have private health insurance, provided by 38 insurers including many small work and industry-based health funds. The new laws raise the income thresholds before Australians must pay a one percent surcharge on their earnings if they do not have private health insurance.

The Government originally planned to raise income thresholds to A$100,000 ($65,360) from A$50,000 for single people and to $150,000 from A$100,000 for couples before the surcharge was payable. But under a compromise to win support for the bill, the new income thresholds will be A$70,000 for single people and A$140,000 for couples, with the thresholds indexed to keep pace with average earnings. Roxon said 2,50,000 people without health insurance would now receive immediate tax relief.

Reuters