The rebate will be phased out starting with singles on incomes of $83,000 and families on $166,000. It will disappear altogether for singles earning $129,000 and couples earning more than $258,000. Single people on taxable incomes of more than $83,000 can expect their health insurance premiums to jump by between $150 and $500 a year, depending on their pay level, as a result of the means test. Couples and families will face increases of between $300 and $1000 on typical health premiums once combined incomes rise above $166,000. But a further penalty, to stop high earners from dropping their insurance, is the Medicare levy surcharge. That will rise from the 1 per cent currently on uninsured higher earners in two stages to a total of 1.5 per cent on incomes above $129,000 for singles and $258,000 for families.

The government says that 7.9 million people will not be affected by these changes, but that leaves more than 2 million who will be. Even so, the government's claim that all but 0.3 per cent of people with private hospital insurance will retain it, and only 27,000 will drop their cover is contradicted by the health funds, which insist the exodus and the impact on public hospital queues will be much greater. The opposition will portray the passage of the bill as a broken promise given the then-Labor leader, Kevin Rudd, promised before the 2007 election not to touch the rebate, which was introduced by the Howard government in its second term. Shadow health minister Peter Dutton this afternoon said the opposition would ''do whatever it takes'' to see the insurance legislation defeated. He said the government have reintroduced the health insurance bill because they want to achieve a budget surplus. ''They have a black hole that they need to patch up,'' Mr Dutton said.

Mr Dutton said that if the bill is passed, it would put regional health services at risk. He added that young, healthy Australians would leave private insurance and other Australians would scale back their cover. The passage of the rebate has been made possible by the defection of Peter Slipper from the Liberal Party to the Speaker's chair. This meant Labor needed just three crossbench votes instead of four. It already had the support of the Greens MP Adam Bandt. It is believed independents Rob Oakeshott and Andrew Wilkie, who announced in July he supported the means test before backing away, are also on board. Mr Wilkie told reporters in Canberra today that he is inclined to support the bill. The final vote in the lower house is expected next week.

The Senate is expected to pass the legislation as the Greens hold the balance of power. Loading with Mark Metherell and Judith Ireland

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