Federal Health Minister Nicola Roxon says the pressure on private insurance brought on by changes to the Medicare levy should not be overstated.
Speaking to reporters in Melbourne, Ms Roxon defended the policy which will see singles not pay the Medicare levy until they earn $100,000 and $150,000 for couples.
When asked how the changes would effect private health insurance, Ms Roxon said: "I think this shouldn't be overstated."
"We are obviously prepared to work with the industry, and we continue to support the 30 per cent, 35 per cent and 40 per cent rebate for those Australians who choose to take out private health insurance," Ms Roxon said.
"But we are not going to leave working families and singles that are under pressure - when their family budgets are tighter than ever - forcing them to pay a tax or take out private health insurance."
Ms Roxon also stood by Treasury modelling on how many people would drop out of private health insurance because of the new policy.
An analysis commissioned by private health insurers found almost a million people would drop their private health cover - twice the amount the government had estimated.
"We absolutely stand by the Treasury modelling that has been done. We are confident we have our calculations right," Ms Roxon said.
"But let's be clear about this: half a million Australians will get tax relief immediately from this measure and Dr Nelson wants to block it."
Earlier, opposition treasury spokesman Malcolm Turnbull accused Treasury of being incompetent.
"They (Treasury) have been incompetent in that respect, or mistaken," Mr Turnbull told the Nine Network on Sunday morning.
Mr Turnbull said the measure would put increased pressure on the public health sector and lift premiums.
But Treasurer Wayne Swan has defended the Medicare levy change.
"We took out a tax slug that the Liberals had left on average working families for a decade," Mr Swan told Channel Ten.
"This government has proudly removed that tax slug."
