CANBERRA (Reuters) – The Australian government will water down plans to reform private health insurance in order to win support in the upper house Senate to pass the new laws, Health Minister Nicola Roxon said on Tuesday.

The changes will be welcomed by private health insurers, who had warned the original proposals would have led to 400,000 people dropping their private health insurance.

The government originally planned to raise income thresholds to A$100,000 ($84,000) before Australians must pay a one percent surcharge on their income if they do not have private health insurance.

But Roxon said the government would now lift the threshold to only A$75,000, with ongoing indexation for inflation, in a compromise designed to ensure minor party and independent support for the laws in the Senate. “It is a pragmatic response, following a Senate inquiry and much consultation,” Roxon told parliament.

The government plans had weighed on shares of Australia’s top private hospital operators Ramsay Health Care Ltd and Healthscope Ltd and on private health insurance fund NIB Holdings Ltd. ($1=A$1.19) (Reporting by James Grubel)