Labor argues the two measures are crucial to make private health more sustainable.
But the coalition says the government is waging an ideological war against private health funds and breaking an election promise in the process.
The proposed changes to the Medicare levy surcharge would have penalised wealthier Australians who didn’t take out private cover.
Singles earning more than $90,000 a year and couples on more than $180,000 would be levied 1.25 per cent of their taxable income, up from one per cent.
Singles earning over $120,000 and couples on more than $240,000 would be slugged with a 1.5 per cent surcharge.
Health Minister Nicola Roxon on Wednesday slammed the Senate for voting against “the first of the private health insurance rebate measures”.
“The opposition have blown a $2 billion hole in the budget and have no health policies of any substance to put forward to the public,” she told parliament.
Earlier, when asked if she’d like to fight a early poll on the issue, Ms Roxon told ABC Radio “it’s something that we are determined to pursue”.
“I am absolutely happy to stand up anywhere anytime to defend the view that taxi drivers and secretaries and nurses should not be paying for the private health insurance of bankers and politicians and millionaires,” the health minister said.
“I think that is a very clear and easy argument to make.”
That argument might be easily prosecuted – but in fact it’s not just the ultra-rich that will be affected.
Labor actually wants to means test and reduce the rebate for individuals earning more than $75,000 a year and couples earning more than $150,000 a year.
Prime Minister Kevin Rudd says the opposition’s determination to block the government’s measures “goes to the heart of our ability to provide finance for our hospital system for the future”.
“The leader of the opposition is standing by the principle that the least-salaried Australians should subsidise the private health insurance costs of someone on $200,000 and $300,000 a year,” Mr Rudd told parliament.
Labor already has a double-dissolution trigger on emissions trading.