Private Health loss of Rebate for some

[medhead]

It costs more to provide health coverage for a person than it does to subsidize 30% of their private cover - simple maths.

The government is not pursuing economics - they are pursuing ideology..... Which means "politics of envy" complaints are entirely legitimate.

In some cases - eg Medhead's - then the government is saving money as Medhead will graciously pay the extra 30% premium and will maintain his private cover so as to not be a burden on the taxpayer.

The unfortunate reality is that not every person will do the same.

That is why it's false economics.

The simple maths is the vast majority affected by this will continue their health cover simple because they don't want to end up in the public system. Hence it will cost less to not subsidise their health insurance.

This measure is wholly about economics. From start to finish, firstly because of the cost of the public system if people below the threshold are not insured. So taking up your point that it is cheaper to pay the 30%. Then the change caps their spending. Why? To help the budget bottom line. The fact that ideology matches the economically responsible path is interesting but ultimately irrelevant.

BTW I'm not going to lose the whole 30%.


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[dfcatch]

The simple maths is the vast majority affected by this will continue their health cover simple because they don't want to end up in the public system. Hence it will cost less to not subsidise they health insurance.

This measure is whole about economics. From start to finish, firstly because of the cost of the public system if people below the threshold are not insured. So taking up your point that it is cheaper to pay the 30%. Then by capping their spending. Why? To help the budget bottom line. The fact that ideology matches the economically responsible path is interesting but ultimately irrelevant.

BTW I'm not going to lose the whole 30%.


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I think that a lot of people who are "well above" the threshold are the type of people who don't think they will get sick anytime soon - and therefore may very well not match up the the expectations of staying private.

If they do - it will only be because of the stick approach..... not in spite of the removal of the carrot.

 

[medhead]

I think that a lot of people who are "well above" the threshold are the type of people who don't think they will get sick anytime soon - and therefore may very well not match up the the expectations of staying private.

If they do - it will only be because of the stick approach..... not in spite of the removal of the carrot.

It's hard to judge. Based on my premium (included the recent 5% increase) the cross over is an income of about $330000, when Medicare surcharge = insurance premium. So the stick should keep anyone on more than that insured.

What happens below is a complex web of numbers. But in my case the most I stand to pay extra is $1400, assuming I lose all of the rebate (which I don't) that is about $2000 more than the surcharge. Frankly I can't think of any level of saving via the surcharge, that makes going private a viable alternative. (in saying that I realise the whole health insurance thing is a bit of a scam) Sure some people will jump on a $3 saving and ignore the loss of access with the public system (to the Drs this is not a comment about quality of service, in general) but others won't.


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[eastwest101]

Will have to sit down and do the maths on this soon. I currently have an income around 100K for myself and 67K for my partner. She and I have family of 3 kids. With my income its all a matter of which stick is the least worst. Quantify loss of PHI rebate (and PHI increases), interaction with medicare surcharges vs Lifetime Health Cover punishment by dropping out of PHI.... Ironically - my partner works as a nurse in the Health industry so my be worthwhile her cutting back a few hours of work..... which seems a tremendous "own goal" to me...

 

[Moody]

Will have to sit down and do the maths on this soon. I currently have an income around 100K for myself and 67K for my partner. She and I have family of 3 kids. With my income its all a matter of which stick is the least worst. Quantify loss of PHI rebate (and PHI increases), interaction with medicare surcharges vs Lifetime Health Cover punishment by dropping out of PHI.... Ironically - my partner works as a nurse in the Health industry so my be worthwhile her cutting back a few hours of work..... which seems a tremendous "own goal" to me...

And this is my beef with the current system - it appears to be designed by a conga-line of suck-holes. If the public system needs more funds then raise the Medicare levy. Private health care should be an option, not a gun to the head.

 

[JohnK]

It enjoys tax deductibility , a low tax environment (15%) which if invested in Australian shares will reduce further as a result of imputation credits etc.

The biggest problem I have with superannuation is that wankers are making a killing out of it and do not care about whether people make or lose out of it.

- Did the staff Christmas party get canned last year because they posted a 10% loss in super funds?
- Did they refuse an upgrade on their overly expensive company car even though the super funds were a failure?
- Did they still pay a bonus to the fat cats even though super funds were a failure?

Also , unless you are forced( as part of your employment arrangements) to make personal contributions then you are not actually contributing at all. The initial 3% contribution was a productivity trade off, however SGC has become a form of deferred income.

There were no productivity trade offs for me. When it first come in I was told that there is no salary increase now as we are paying your super and ever since then super has been included as part of my salary package so I could not negotiate a greater take home pay.

Loss for me and gain for someone else.

I pay for enough people in this world to survive and I do not need to pay for fat cats

When and if you retire the income or lump sum you receive will free of tax.

Well I certainly hope so but I will not be holding my breath to find out. After all my superannuation will be used to pay for all the credit card debt I am accumulating right now trying to enjoy my life. I may get a pension after all.

By the way I am not meaning to be critical of your post as I just wanted to add some of my thoughts.

Gee, i should have kept reading. Didn't realise we got into the politics of envy and working harder BS. Simple fact is this impacts on 15% of taxpayers and by an amount that they can afford.

Thanks for making a decision for me but I cannot afford to give any more as I am giving more than enough right now.

Just because I was stupid enough to work hard and use my hard earned money, that I had already paid tax on, to invest and I am now paying additional tax on my investment income. Why? Out of the goodness of my heart?

And that stupid flood levy was the straw that broke the camels back. Like I care about someone who decides to buy/build/live in a flood plain and not have the appropriate insurance....

 

[MEL_Traveller]

I really can't see the issue here. If you're earning that much money then you are good at your job. Most of us who are good at our jobs to be earning that much are getting bonuses and/or at least a 3% pay-rise in line with inflation (unions are good for negotiating contracts!)

That 3% on such a high salary easily covers the few extra dollars in private health. And private health is worth it if you are earning such a high salary because if you need anything done, or to see a specialist you get in right away and get some of the best care (for emergency care public is still best and that's what we pay for).

I tend to agree that paying the flood levy is a bit rich. But at the time there was a lot of public sympathy. Although they might have told us before everyone gave donations so freely.

But just as some people might not care that someone has built in a flood plain, I'm sure there are others that don't really care if someone feels the need to drive an expensive imported car, or send the kids to private school, or do mileage runs.

 

[dfcatch]

I tell you what - why don't all the folks that want to contribute more - can do so voluntarily - and the rest of us can keep our rebate.

That should keep everyone happy

Besides - we keep getting told on here that everyone is prepared to pay the extra, and that it's no burden.

 

[Deleted member]

The biggest problem I have with superannuation is that wankers are making a killing out of it and do not care about whether people make or lose out of it.

- Did the staff Christmas party get canned last year because they posted a 10% loss in super funds?
- Did they refuse an upgrade on their overly expensive company car even though the super funds were a failure?
- Did they still pay a bonus to the fat cats even though super funds were a failure?


There were no productivity trade offs for me. When it first come in I was told that there is no salary increase now as we are paying your super and ever since then super has been included as part of my salary package so I could not negotiate a greater take home pay.

Loss for me and gain for someone else.

I pay for enough people in this world to survive and I do not need to pay for fat cats


Well I certainly hope so but I will not be holding my breath to find out. After all my superannuation will be used to pay for all the credit card debt I am accumulating right now trying to enjoy my life. I may get a pension after all.

By the way I am not meaning to be critical of your post as I just wanted to add some of my thoughts.


Thanks for making a decision for me but I cannot afford to give any more as I am giving more than enough right now.

Just because I was stupid enough to work hard and use my hard earned money, that I had already paid tax on, to invest and I am now paying additional tax on my investment income. Why? Out of the goodness of my heart?

And that stupid flood levy was the straw that broke the camels back. Like I care about someone who decides to buy/build/live in a flood plain and not have the appropriate insurance....

I get your point. But I do once again have to remind you super is a set of rules. Not a product. You can actually choose the product. And it doesn't have to be managed funds.
Your house ( most likely ) went Down in value in the last few years, is that the real estate agents fault.? Or the builder that constructed it? Or yours? Or maybe the guys in super funds management ?
I am not wedded to any particular investment type or environment. For example I don't like stamp duty. And not keen on CGT.
But it's not enough to make me move to,NZ where neither of these taxes exist (yet) .
And they have a silly super scheme over there that is not as good as ours.

There has been a major trade off ( with compulsory super) that has had a positive effect , Australia now enjoys a significantly higher level of personal savings than at any time in history. The effect of this is that it helps stabilize the economy because high levels of long term savings is not only good for individuals but good for business.

The fact is a pension is increasingly going to be about safety net , not a reasonable retirement income. So coughing about it ain't going to make your life any better, in fact act now or it will get worse

And I do understand how you feel , you are not alone

Ps. Your profile lists you as an IT consultant , does that not infer you are able to set / negotiate your own income?

 

[medhead]

The biggest problem I have with superannuation is that wankers are making a killing out of it and do not care about whether people make or lose out of it.

- Did the staff Christmas party get canned last year because they posted a 10% loss in super funds?
- Did they refuse an upgrade on their overly expensive company car even though the super funds were a failure?
- Did they still pay a bonus to the fat cats even though super funds were a failure?


There were no productivity trade offs for me. When it first come in I was told that there is no salary increase now as we are paying your super and ever since then super has been included as part of my salary package so I could not negotiate a greater take home pay.

Loss for me and gain for someone else.

I pay for enough people in this world to survive and I do not need to pay for fat cats

They have this thing called choice of super fund, perhaps you need to exercise your choice. I'm certainly very happy with the super funds that I have chosen.

9% super doesn't prevent you from negotiating your base pay.

Not getting a payrise is the productivity trade off.

Thanks for making a decision for me but I cannot afford to give any more as I am giving more than enough right now.

Just because I was stupid enough to work hard and use my hard earned money, that I had already paid tax on, to invest and I am now paying additional tax on my investment income. Why? Out of the goodness of my heart?

And that stupid flood levy was the straw that broke the camels back. Like I care about someone who decides to buy/build/live in a flood plain and not have the appropriate insurance....

ok I have no idea how this relates to what you quoted from me. I haven't made any decision for you! As you giving more, you will be giving the same and will be getting less. How you earn you're income is irrelevant. But I'll tell you one thing everyone works hard! The amount one is paid provides absolutely no indication of how hard one works. Are those fat cats running your super fund working harder than you?


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[medhead]

I tell you what - why don't all the folks that want to contribute more - can do so voluntarily - and the rest of us can keep our rebate.

Besides - we keep getting told on here that everyone is prepared to pay the extra, and that it's no burden.

I tell you what why don't we stop trying to spin words. No one has said they want to pay more. What I have said is that the benefits me and my family get are worth the reduced government hand out.

I might like it if people stopped putting up spurious arguments about this solely on the basis of political ideology. I can see the heads exploding because an economically responsible measure has been put in place to reduce spending and that disagrees with preconceptions of the current government. I love the hypocrisy of demanding government hand outs by those who would cut hands outs to other people in the blink of an eye. It's highly amusing.


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[dfcatch]

I tell you what why don't we stop trying to spin words. No one has said they want to pay more. What I have said is that the benefits me and my family get are worth the reduced government hand out.

I might like it if people stopped putting up spurious arguments about this solely on the basis of political ideology. I can see the heads exploding because an economically responsible measure has been put in place to reduce spending and that disagrees with preconceptions of the current government. I love the hypocrisy of demanding government hand outs by those who would cut hands outs to other people in the blink of an eye. It's highly amusing.


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Medhead - you assert that it's the economically responsible policy.

I don't.

I hold the direct opposite assertion that leaving it un-tested is more economically beneficial, minimizes marginal effective tax rates and encourages higher incomes (and therefore tax receipts).

 

[MEL_Traveller]

...

How you earn you're income is irrelevant. But I'll tell you one thing everyone works hard! The amount one is paid provides absolutely no indication of how hard one works. Are those fat cats running your super fund working harder than you?


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It's not always about working hard - it's about working smarter. In my line of work if I see a colleague staying in the office for long hours it's because they aren't using their time efficiently, or don't have the required knowledge to be able to complete the task in a timely fashion. One person might be putting in long hours, but they're sitting there having to do hours of research to put something together. Others have the knowledge and can put a proposal together in an hour.

I would argue that anyone earning their 250K combined to lose the health rebate is working smart enough to be able to manage the extra.

I'm with an industry super fund, no fees or commissions. The people making the money are there because they are smart at what they do and make money accordingly. So are they working harder than me? Probably not, but they could be working smarter. But the risks are high.

 

[simongr]

medhead - why is PHI a scam?

back to the main topic - my issue is primarily that the govt is increasing taxes on my income - I do not want increased taxes.

There are lots of economically responsible things that the government should be doing which they are not. Since they came to power there has been a constant stream of increased taxes - something I am not a fan of.

 

[medhead]

medhead - why is PHI a scam?

I probably mean the whole Medicare surcharge, rebate thing but that goes to the viability of the industry. Basically, I will have been paying X thousands of dollars for 20 or 30 or 40 years before I need serious health treatments. So at the current premium that's like $100,000 to $200,000 in premiums. How much of a nest egg could I have saved with that money in that time with conservative investment? Maybe enough to cover my future medical needs? In saying that, of course I realise that insurance is about averaging risks and pooling the financial cover. Hence I said a bit of a scam.

There are lots of economically responsible things that the government should be doing which they are not. Since they came to power there has been a constant stream of increased taxes - something I am not a fan of.

they've also reduced some taxes, so not a constant stream of increases. Business tax is turning into an interesting test for political ideologies and alliances. What's that curse about living in interesting times?


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[JohnK]

I tell you what - why don't all the folks that want to contribute more - can do so voluntarily - and the rest of us can keep our rebate.

So true.

Besides - we keep getting told on here that everyone is prepared to pay the extra, and that it's no burden.

I hate it how some people can say "You are on a good salary so you can afford to pay more". Could not be further from the truth. They know nothing about individual situations yet are qualified to speak on what one can afford and cannot afford. I think most people know my story. I pay enough as it is and cannot afford to spend another cent.

Your house ( most likely ) went Down in value in the last few years, is that the real estate agents fault.? Or the builder that constructed it? Or yours? Or maybe the guys in super funds management ?

No one fault. Personally I could not care how much my house worth but I will start worrying if the rent prices dropped.

But it's not enough to make me move to,NZ where neither of these taxes exist (yet) .

I wouldn't move over there either. But if I ever managed to work overseas you would not see me paying taxes in Australia. We are one of the highest taxed nations in the world but we can afford it. Right?

Ps. Your profile lists you as an IT consultant , does that not infer you are able to set / negotiate your own income?

Unfortunately no. Not even the obligatory 3% CPI increase.

 

[JohnK]

ok I have no idea how this relates to what you quoted from me. I haven't made any decision for you! As you giving more, you will be giving the same and will be getting less. How you earn you're income is irrelevant. But I'll tell you one thing everyone works hard! The amount one is paid provides absolutely no indication of how hard one works. Are those fat cats running your super fund working harder than you?

I don't think it was aimed at you. Someone else posted that if we are earning enough money then we should be able to subsidise the less fortunate.

Sorry but I subsidise them enough and if I had to subsidise them anymore then I will need to cut from my overseas travel fund, and if I had to that then I would not be as productive here in Australia, and then I would not be earning as much and then I would not be able to subsidise as much as I am now let alone any extra.

We are already one of the highest taxed nations in the world and let's not try to make it the highest. And don't get me started on this totally stupid carbon tax....

 

[dfcatch]

To me - besides the fact that it's cheaper to subsidize someone's PHI than it is to cover them under the public system -

The second issue to me is that these policies act as a disincentive to working harder - it's counter-productive.

 

[medhead]

To me - besides the fact that it's cheaper to subsidize someone's PHI than it is to cover them under the public system -

The second issue to me is that these policies act as a disincentive to working harder - it's counter-productive.

Talking about trolling.

Paying nothing at all is cheaper than either option, especially when some people will collect their PHI rebate and also take themselves off to the public hospital for free treatment.

Also it does not stop people from working harder at all, even if it might be a disincentive to earn more. Sorry but working harder and earning more are in no way the same thing. You can work as hard as you like and still get the full PHI rebate. Classic Liberal distraction to pretend that they are the same.


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[dfcatch]

Talking about trolling.

Paying nothing at all is cheaper than either option, especially when some people will collect their PHI rebate and also take themselves off to the public hospital for free treatment.

Also it does not stop people from working harder at all, even if it might be a disincentive to earn more. Sorry but working harder and earning more are in no way the same thing. You can work as hard as you like and still get the full PHI rebate. Classic Liberal distraction to pretend that they are the same.


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I don't know about you Medhead, but if i'm working harder, then generally speaking I'd like to be earning more for it

But yes - you are technically correct