Stephen Jones blasts Medibank Private sale

Throsby MP Stephen Jones has condemned the government's decision to sell off Medibank Private, claiming the move will divert up to $500 million in annual dividends from the public purse.

Mr Jones, the opposition assistant spokesman for health, said the sale would cause health insurance premiums to rise across the board and questioned what it would mean for Wollongong-based insurer ahm, which was acquired by Medibank Private in 2009.

Mr Jones said the sale was a bad decision, following the biggest increase to health insurance premiums - 6 per cent - recently approved by the government.

"This will rob the budget bottom line of between $350-500 million dollars per annum, because that's the dividend that Medibank pays the government each year," Mr Jones said.

Throsby MP Stephen Jones.

Throsby MP Stephen Jones.

"And it will impact on the premiums of people paying for private health insurance.

"Expect another big whack. As the biggest insurer in the market - with over 30 per cent of market share - what Medibank does; others will follow."

Mr Jones said the sale would mean uncertainty for ahm, which "should remain part of Medibank and should remain headquartered in Wollongong".

Mikala Hehir, head of external affairs at ahm, said the insurer would keep its members and employees informed about the Medibank privatisation process as it unfolded.

"For ahm members and employees, there is no change," she said.

"Regardless of who owns Medibank, we are focused on delivering our customers excellent value and service, and growing the business. This won't change. It's business as usual for us, and there is still a long way to go."

On Thursday, Finance Minister Mathias Cormann defended the government's decision to sell the insurer and hit back at Labor's claims of a valuable revenue stream lost.

The proposition that the Commonwealth would be able to draw half a billion dollars in dividends a year was "ridiculous", he said.

Opposition health spokeswoman Catherine King admitted there was little the opposition could do to block the sale, with laws passed in 2006 allowing the government to sell the insurer without parliamentary approval.

"What they need to do is guarantee that premiums will not rise as a result of this decision," she said.

As the main parties fought over the proposed sale of Medibank Private, Greens health spokesman Richard Di Natale introduced a private member's bill to Parliament that aims to prevent private insurers from providing GP cover.

Along with other insurers, Medibank Private wants to offer coverage for GP services - a proposal the senator says would see health insurance premiums "skyrocket".

Private insurance of GP visits would "mark the end of Medicare as we know it", he said.