Income-testing of rebate to go under Coalition

Opposition health spokesman Peter Dutton says a Coalition government would repeal Labor's plan to income-test the private health insurance rebate, but only when it could afford to do so.

There have been suggestions a Coalition government would keep the test to shore up the budget.

The private health insurance rebate is one of the 20 most expensive programs in the budget, forecast to cost $5.56 billion this financial year and $5.4 billion in the 2014 financial year.

But Mr Dutton said: "Our stated position, which hasn't changed, is that we're very keen to ... change what is bad policy by the government, but we can only do that at a time when we can fiscally afford to do so."

He said if the Coalition won the federal election in September, it would scrutinise the $62 billion spent by the Health Department each year but "quarantine" medical research from cuts.

"I think to increase that productivity and efficiency will be that first charge for whoever the minister is after the election," he told a healthcare conference in Melbourne.

And Mr Dutton criticised the government's policies to bring down the cost of the $9.6 billion Pharmaceutical Benefits Scheme, saying Labor had "starved us of some opportunity for investment in this country".

Under its price disclosure program, the government has reduced the price it pays for medicines to draw them in line with prices paid by pharmacists. Industry has complained, and on Tuesday drug giant GlaxoSmithKline announced it would cut 120 jobs at its Melbourne base, citing high costs in Australia.

Despite several measures to stem the cost of the private health insurance rebate, this month's federal budget papers said the cost of the rebate would actually rise over the three years to 2017 "due to continued take-up of private health insurance policies".

Labor introduced means-testing of the private health insurance rebate in July last year, sparking a surge in prepayments. It then flagged it would cap increases in the rebate to the rate of inflation, and scrap paying the rebate on the "lifetime cover loading" component of insurance.

This prompted UBS healthcare analysts to declare the "easy days" for private health insurance "might be over".