FED:NIB bets on private health change failing

AAP General News (Australia)
08-22-2011
FED:NIB bets on private health change failing

By Belinda Tasker, AAP Medical Correspondent

SYDNEY, Aug 22 AAP - If the head of private health insurer NIB was a betting man, he'd
take a big punt that the federal government's planned changes to the 30 per cent rebate
will fail.

With the controversial legislation due to be debated by parliament within days, Mark
Fitzgibbon said he did not think the government could secure enough support for its plans
to means test the rebate.

The Greens have flagged they will vote against the legislation, mainly because it also
includes plans to increase the Medicare surcharge levy for people without private cover.

Key independent NSW MP Rob Oakeshott, who has concerns about levels of private health
insurance in rural communities, is also proving difficult for the government to win over.

"If I had to bet my life on something I would say it won't pass the lower house, and
even if it does pass the lower house, if the Greens make good their promise it won't pass
the Senate," Mr Fitzgibbon told investors on Monday.

Under the government's plans, people earning more than $80,000 and families on over
$160,000 will no longer qualify for the 30 per cent rebate.

The Medicare surcharge levy would also rise for the wealthiest Australians without
cover from 1.0 to 1.5 per cent of their taxable income, something the Greens believe will
only discourage people from taking out private cover.

NIB stands to lose about 2000 policyholders if the changes make it through parliament.

Mr Fitzgibbon said while the proposals were not keeping NIB "awake at night", the company
believed the policy was heading in the wrong direction.

"The government needs to do more to encourage people to take responsibility for their
health care," he said.

Mr Fitzgibbon's comments came as NIB reported its net profit increased by more than
six per cent to $65.5 million in 2010/11 from $61.5 million a year earlier.

Premium revenue hit a record $1 billion, up 11.8 per cent from $901.4 million, while
policyholder growth was double the industry average at six per cent.

NIB expects policyholder growth to rise by three per cent this financial year, despite
uncertainty surrounding the broader economy.

Mr Fitzgibbon said he expected private health cover to become more significant and
industry consolidation to continue, with NIB continuing to explore acquisition opportunities.

He predicted Medibank Private would be sold off quite quickly if the federal coalition
won power at the next election.

A rise in demand from international companies to provide health cover to their workers
around the world would also create "a force towards global health insurance" with three
or four players dominating the market, as in general insurance.

NIB plans to continue its buyback of up to 10 per cent of its issued shares, pay special
dividends when possible and consider another capital return to shareholders in 2012.

It declared a final dividend of nine cents, fully franked, for 2010/11.

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