Shares in Australia's only listed private health insurer, NIB Holdings Ltd, plunged in early trading on Monday ahead of changes to the Medicare levy surcharge threshold in Tuesday's federal budget.
The federal government on Sunday confirmed it would double the surcharge threshold for singles from $50,000 to $100,000, while the threshold for couples would rise from $100,000 to $150,000.
The decision has been criticised by some in the private health sector, including the Australian Medical Association and private insurers, who claim more people will opt for the public health system.
At 1031 AEST Monday, NIB shares were 16 cents, or 17.78 per cent, lower at 74 cents.
Shares in private hospitals operators Ramsay Health Care Ltd and Healthscope Ltd also fell sharply.
Ramsay was down 77 cents, or 6.14 per cent, at $11.78, and Healthscope reversed 29 cents, or 5.54 per cent, to $4.94.
Federal Treasurer Wayne Swan said on Monday that a lift in the Medicare levy surcharge threshold would free two million people from a tax trap.
"We have removed that tax trap. I think it is a fair thing to do and it is a very fair decision," Mr Swan told reporters on the eve of his first budget.
Mr Swan confirmed there would be extra funding for public hospitals.
"Certainly there will be money in the budget to bolster the public health system because that's the commitment we made to the Australian people," Mr Swan said.
