Australia says 500,000 people to dump health cover

CANBERRA (Reuters) - Almost 500,000 Australians will dump private health insurance after new laws, designed to ease the tax burden on families, passed through Australia’s parliament, Health Minister Nicola Roxon said on Thursday.

The changes have angered the industry and weighed down on the shares of Australia’s top private hospital operators Ramsay Health Care Ltd and Healthscope Ltd and on private health insurance fund NIB Holdings Ltd .

The new laws, first proposed in the center-left government’s May budget, were passed in parliament on Thursday after Roxon 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,” Roxon told reporters.

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 1 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 250,000 people without health insurance would now receive immediate tax relief.

($1=A$1.53)

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