In order for the government to keep health care spending down, and to get the most out of the health care budget, it is in its best interest to have more Australian citizens insured privately.
The government offers incentives to encourage citizens to pay for private health insurance if it is within their means. The incentives include:
Private Health Insurance Rebate: The government subsidises the premiums that members of private health insurance are subject to for all cover. The size of that subsidy will become means tested and operate on a sliding scale in the near future under the Rudd government.
Lifetime Health Cover: All citizens who have no taken out private health insurance by the age of 30 are subject to a 2% higher premium for every year they are uninsured up to 70%. For example an individual who does not take out private health insurance until the age of 65 will pay a 70% higher premium than those who have had it since the age of 30.
This is to encourage the (typically) healthy young people of the nation to take out insurance early to ease the burden on the public system rather than waiting until they become frail and prone to sickness and disease (old age).
If you buy private health insurance when you are 35 and continue to hold private health insurance after you are 45, the 10% loading you accrued between 30 and 35 will be removed for as long as you retain your private health insurance.
Medicare Levy Surcharge: Singles who earn over $70,000 or couples who earn over $140,000 per year who are not adequately covered by private health insurance are subject to a 1% surcharge in addition to the existing 1.5% Medicare Levy.