Medicare shake-up could benefit millions

Private health cover won't necessarily drop off following the planned Medicare shake-up, Federal Treasurer Wayne Swan says.

Up to two million Australians may soon be exempt from the $600 Medicare levy fee under changes to be outlined in Tuesday's federal budget.

The federal government has announced it will double the income threshold for the levy kicking in, from $50,000 to $100,000 for singles.

The income threshold for couples will also rise from $100,000 to $150,000.

Mr Swan said the thresholds, unchanged since 1997, put unfair pressure on working families.

"This initiative will benefit potentially up to two million people; it is only fair that they should be able to make the choice," Mr Swan told reporters.

Asked if the measure would see people leaving the private health insurance system, Mr Swan said: "I don't accept that necessarily.

"If they are satisfied with their private health insurance they'll keep their private health insurance," he said.

Mr Swan said lifting the thresholds, originally intended to coax people into the private health sector, had been a pressing issue for the government.

"There's probably no issues on which I have received more representations over such a long period of time than this issue," he said.

"The unfairness of the thresholds and the reluctance of the previous government to adjust them a decade."

The peak body for Australia's private health insurers says raising the trigger point for the Medicare levy will result in more pressure on public hospitals, and higher insurance premiums.

The Australian Health Insurance Association (AHIA) chief executive Michael Armitage on Saturday said the government had not consulted the industry over the move, which he also branded as "silly".

"It is going to result in up to 400,000 people relying on the public sector for their health care, so everyone who waits longer on a waiting list from Tuesday onwards can blame the Federal Government," Dr Armitage told AAP.

"It will mean increased premiums for those people who remain in private health insurance ... so everyone whose premium goes up can also thank the federal government.

"It's a silly decision."

The AHIA represents 23 private health funds with a combined membership of more than 10 million Australians.