Australia says 500,000 people to dump health cover

CANBERRA, Oct 16 - Changes to Australia's health insurance laws, designed to ease the tax burden on low-income families, will see almost 500,000 people will dump private health insurance, Health Minister Nicola Roxon said on Thursday.

The government plans have angered the industry and weighed down on the shares of Australia's top private hospital operators Ramsay Health Care Ltd <RHC.AX> and Healthscope Ltd <HSP.AX> and on private health insurance fund NIB Holdings Ltd <NHF.AX>.

Roxon said the government had offered a new compromise on the legislation and had won the backing of the Greens and independent Senator Nick Xenophon, ensuring the laws would now become law.

"The projection of the number of people from Treasury that will drop out of health insurance is just under half a million, 492,000 people," Roxon told reporters.

The new laws raise the income thresholds before Australians must pay a 1 percent surcharge on their earnings if they do not have private health insurance.

The government originally planned to raise income thresholds to A$100,000 ($65,360) from A$50,000 for single people and to $150,000 from A$100,000 for couples before the surcharge was payable.

But under a compromise to win support for the bill, the new income thresholds will be A$70,000 for single people and A$140,000 for couples, with the thresholds indexed to keep pace with average earnings.

Roxon said 250,000 people without health insurance would now receive immediate tax relief. ($1=A$1.53)