Plans to make it legal for private health insurers to cover GP visits could lead to higher premiums and cost the Government around $3.4bn over five years.

Under current legislation, it is illegal for insurers to cover GP visits outside hospitals. This latest reform could increase premiums by 2% for the first four years.

Documents leaked from the Department of Health and obtained by the Australian Financial Review warn that GPs will increase their fees to cover the cost of insurance.

“While this measure would provide assistance to privately insured patients who are not bulk-billed, it would have the perverse effect of reducing the percentage of private insured patients who are currently bulk-billed as GPs sought to charge the maximum allowed by the private insurer for a full rebate,” the document said. “The department does not support this idea. It could result in a two-tiered system with the privately insured receiving more favourable treatment than those who are not insured. It would also have upward pressure on premiums.”

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