Medibank Private's full conversion into a "for-profit" enterprise will improve competition in the health insurance market, Finance Minister Lindsay Tanner says.
The change of status to a Government Business Enterprise (GBE), announced in the May budget, will put Medibank Private on an equal footing with its major competitors.
"This important change will ensure competitive neutrality in the private health insurance industry," Mr Tanner said in a statement on Thursday.
"With this conversion, over 70 per cent of health fund members are serviced by for-profit health insurers who pay tax and dividends."
Medibank Private will be treated like other GBEs such as Australia Post, giving it "additional freedom and incentives to continue innovating".
Mr Tanner said the government has worked closely with Medibank Private to implement the conversion since receiving approval from the Private Health Insurance Administration Council (PHIAC) in July.
Medibank Private will continue to be required to meet prudential standards set by PHIAC, which provide protection for health fund members.
"Medibank Private has assured the government that the conversion will not affect its members and more importantly, the conversion itself will not put upward pressure on premiums," Mr Tanner said.
"The government remains committed to retaining Medibank Private in public hands and will remain the only shareholder."
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