High-income earners would pay at least $900 more in taxes under a Greens plan to raise an extra $13 billion for the health budget.
The crossbench party wants all high-income earners - singles on more than $90,000 or families on more than $180,000 - to pay the Medicare levy surcharge, regardless of whether they have private health insurance.
Greens leader Richard Di Natale had the policy costed last month by the independent Parliamentary Budget Office, which found it would raise an extra $13.37 billion for federal coffers over the next four years.
Senator Di Natale, a former GP, said private health insurance was a "waste of money" for many people, with the cost of premiums going up every year while the amount of cover only ever goes down.
"Giving a big tax break to high income earners who take out private health insurance doesn't take the pressure off the public hospital system and forces people to buy a product many don't want or need," he said.
"The Greens will remove this exemption from the MLS and reinvest the $13b in taxpayer money into the public health system to reduce hospital waiting lists and provide Medicare funded dental care."
Currently, the 1 per cent to 1.5 per cent surcharge is levied only on high-income earners who do not take out private health health insurance. Coming on top of the Medicare levy, which is paid by most taxpayers, the surcharge is designed to encourage people to use private hospitals and take pressure off the public system.
But the Greens believe some high-income earners take out junk private health insurance policies to minimise their tax even though they don't provide value for money or take pressure off the public hospital system.
The Greens policy mirrors one put forward last month by the Australian Council of Social Services advocacy group in their budget submission.
Under the plan, a single person earning $90,000 would pay an extra $900 in tax a year. People on $280,000 would pay an extra $4200.
Doing away with the exemption could affect the top 20 per cent of Australian households, ACOSS says.
There is speculation the government may use the May budget to raise the Medicare levy as it seeks to cover ballooning health costs, and pay for the ramp-up of the National Disability Insurance Scheme.
Doctors believe a rise is on the table, and Senate crossbench powerbroker Nick ??Xenophon has indicated he would support a levy increase of between 0.25 per cent and 0.5 per cent. A 0.5 per cent increase to the levy could deliver the government more than $4 billion in extra revenue a year.
Taxpayers currently contribute 2 per cent of their taxable incomes to the levy, which raises about $15 billion a year. However a quarter of that revenue is earmarked for the NDIS, leaving about $11 billion to $12 billion a year to cover Medicare - which currently costs about $22 billion a year.
Prime Minister Malcolm Turnbull and other senior government figures have not ruled out a rise in the levy.
The story High income earners to be slugged with higher Medicare costs under Greens plan first appeared on The Sydney Morning Herald.