PERTH DOORSTOP - Dr Rosanna Capolingua on private health insurance premiums set to rise as a result of the Rudd Government's Budget initiatives

QUESTION: What will that mean for people that are, you know, paying premiums at the moment?

DR CAPOLINGUA: Because people will drop out of private health insurance, the private health insurance will - premiums will actually increase. And there's an estimate that it will increase about five per cent over and above, the five per cent annual increase. So, we're talking about a 10 per cent hike in private health insurance premiums, for those who want to continue to have the security of private health insurance.

For many, that's going to push them over the edge, and those people, the most sensitive and vulnerable, are those that are chronically ill, those that are disabled, the pensioners, the self-funded retirees, the families that save for their private health insurance.

QUESTION: Treasurer Wayne Swan says that the Access Economic Report is wrong, is incorrect, it's not true at all.

DR CAPOLINGUA: It doesn't take much to do even a back of the envelope calculation based on the Budget line figures, about what the Government claimed they were going to save, on the 30 per cent rebate, from their expected fallout; their predicted numbers of people that'd drop out of private health insurance. So, I'm afraid, that's not good creds for the Treasurer, if he can't see, in his own numbers, the predicted number of people that will drop out of private health insurance.

QUESTION: He says at the moment, that younger people, the people that this will affect most, are being ripped off by private health insurance companies: how would you respond to that?

DR CAPOLINGUA: Young people that have chosen to take up private cover have had the incentive of not paying the Government tax, which is the Medicare Levy Surcharge, and they've been supported with the 30 per cent private health insurance rebate, and also, if you're less than 30, you take out your insurance, you benefit from the lifetime community rating. And on top of that, when you need care, and when you need to get into a hospital, you can access that care in a timely and clinically appropriate manner.

So those people now, have had a message from the Treasurer, not to keep their private health insurance, and for those younger people coming up, not to bother taking it out. And they're going to fall into the public sector. And it's that same Treasurer that's going to have to pay the states, to give the states compensation, for the extra people that are going to be putting more pressure on our public hospitals.

QUESTION: What is that pressure going to be like? Can you explain to us how much pressure that's going to put on public hospitals?

DR CAPOLINGUA: Across the country, we believe that something, sort of around 600,000 at least, up to a million people will drop out of private health insurance cover, due to the change in the Medicare Levy Surcharge Income Thresholds. So that is the now thing. They won't renew their premiums, at the time of premium renewal, or when they're doing their tax, they won't bother to take our private health insurance; they'll make that choice. The fall out will happen over this year.

That will be pressure, immediately, from young people's needs in the public hospitals. You know, the sporting injuries, young couples making babies, in fact, will fall into the public hospitals and maternity hospitals, looking for care.

So that's an instant thing that's going to happen over time. That dropout of private health insurance will push the premiums up, the premiums will become unaffordable for others, and when they start to drop out as well - and they're the ones that are more senior, more chronically ill - then the burden to the public sector is huge.

The hospitals are on their knees now. All I can say is that they're going to be flat on their backs.

QUESTION: Why do you think he's done this then?

DR CAPOLINGUA: I ask myself that question all the time. Why has the Treasurer decided to make this change? Two reasons: a projected savings on the 30 per cent rebate, and really, that's what it's about. If people drop out of private health insurance, then the Government doesn't have to commit to that 30 per cent rebate. Even though, pre-election, they promised they would support it; they found a backdoor way of undermining it.

And the other, well, is it Labor ideology to not support the private sector?

QUESTION: By saying that hospitals will be on their knees, this morning Wayne Swan was saying that the Federal Government will be putting a lot more money into the public health system; do you think that they'll be able to counter this?

DR CAPOLINGUA: Certainly the commitment in the Budget to health, in this Budget, all that does is keep the status quo. It keeps the hospitals treading water. There would need to be a significant increase to compensate for the extra burdens. And you have to ask yourselves, this is a downward spiral here; the Government doesn't really want to keep funding public hospitals at the level of need and demand, they've put all these performance benchmarks in place on the states, through the Hospital and Health Reform Commission.

For them to deliver, now - this is a nonsensical issue, where we're causing a spiral, an imbalance between the public and private sector in this country, which will affect all Australians.

ENDS