It's likely to pass parliament, since during the election campaign Labor proposed to pause indexation for a decade , while the Greens promised to scrap the rebate altogether within four years.

The move was buried within the 2016 budget papers but has largely escaped public notice. Even the government's own privatehealth.gov.au information site says indexation is due to resume in 2018, perhaps because the extension is yet to be legislated.

He points out that the average full-time wage would be about $90,000 by 2020-2021, based on the long-term wage price index in the budget of 2.75 per cent.

Ian McAuley, a fellow at the Centre for Policy Development, has highlighted the freeze in a paper on private health insurance and public policy to be presented at the 2016 Health Insurance Summit this coming Thursday.

​Mr McAuley is a proponent of the idea that directly funding private hospitals alongside the public system would be more efficient than giving public subsidies to private health insurers.

He argues the freeze in the threshold for private health rebates and the Medicare Levy Surcharge takes the cost of subsidising the insurance sector off the budget and into the "dark world of hidden subsidies". He argues exempting private health fund members from the Medicare Levy Surcharge is a form of subsidy for the industry.

Currently the government pays $6.5 billion in direct outlays for the rebate and $1.6 billion in "tax expenditures" (because the rebate does not count as taxable income). The freeze in the threshold means the government will gradually shell out less for the rebate, while the pressure on individual taxpayers to buy private health cover will increase.

"What has passed for an economic debate in the last two elections has been mainly about the size of the deficit," Mr McAuley says in his paper. "That focus encourages cost-shifting and resort to what are known as 'privatised taxes'. Private health insurance ... is essentially a privatised tax, designed to achieve some of the same outcomes as Medicare, but without the exposure of public scrutiny and without the automatic community rating built into the tax system."

He says the political emphasis on the size of the deficit leads to politicians prioritising bookkeeping and the "cosmetics of fiscal rectitude" over responsible economic management – meaning if a cost can be shifted off-budget it will be because it looks better, even if it's less efficient. Toll roads and private health insurance are two key examples of this trend.