Health insurance costs in NSW are set to rise significantly under the Minns Government’s new health tax. Starting next year, this means a $156 annual fee for families as the government introduces a levy that will almost double the current tax on health insurance. 

The legislation, which passed through the Legislative Assembly with minimal scrutiny, will increase the tax on health insurance from $1.77 to $3.27 per week, raising $229 million annually to address the state’s budget deficit. 

MP for Kiama, Gareth Ward has made a statement strongly opposing ‘Labor’s cash grab’, stating nearly 50,000 people in his electorate rely on private health insurance. 

“I oppose Labor’s moves to crucify working families, people on fixed incomes, and those working so hard to afford to pay for private health…this is a bad bill” said Mr Ward. 

The hike equates to a 4.1% premium increase and is expected to drive at least 75,000 people to drop their health insurance. This will result in greater reliance on the already overwhelmed public health system, increasing pressure on hospitals and creating longer surgery wait times.

The tax will apply uniformly, regardless of income or level of coverage. Dr Rachel David, CEO of Private Healthcare Australia, has criticised the tax as regressive, affecting those on lower incomes the most. Many families will experience another noticeable hit to their finances during this challenging cost-of-living crisis.

With about 4 million residents impacted, the tax has been labelled as unfair, particularly in regional and rural areas where health cover uptake has increased in recent years. It is expected to result in a significant financial burden on individuals already facing cost-of-living pressures. 

The tax may potentially cost taxpayers $49 million in 2025 due to increased demand for public services, and that the government may only realise 73% of the expected revenue as people adjust their health cover choices. 

Health funds are urging members of the NSW Legislative Council to vote against the legislation.