The Senate inquiry examined the impact of the government's bill to lift the income threshold before the surcharge kicks in. For individuals, the threshold would increase from $50,000 to $100,000 and for couples from $100,000 to $150,000.
Treasury modelling suggests 644,000 people will leave private health funds as a result of the changes.
But the Senate committee report, tabled on Wednesday, says they will not suddenly need treatment in a public hospital.
"Particularly if, as is widely excepted, these people are young and healthy," the Labor-dominated committee said.
Treasury expects with 644,000 people opting out of private cover the government will save $960 million on the rebate and forgo revenue of $660 million - a net saving of $300 million over the next four years.
But modelling conducted on behalf of the Australian Health Insurance Association (AHIA) suggests 908,000 people will drop out.
Access Economics told the Senate committee it estimated 1.15 million would leave or decline to take up private cover, leading to an additional cost on public hospitals of $3 billion by 2012.
A dissenting coalition report says the surcharge changes will "damage the private health sector and, as a consequence, inflict significant damage on our public health system".
Coalition senators called on the government to commission the Treasury to undertake comprehensive modelling for the "second round" or flow-on effects of the bill.
"The government did not cost, model or in any way assess the impact on public hospitals, on the future costs of private health insurance or on health insurance membership levels after premiums increased as a result of this measure," coalition Senators Alan Eggleston, Mathias Corman and Barnaby Joyce wrote.
The committee majority agreed such modelling would be worthwhile but said "the assumptions required to underpin (it) are inadequate for a rigorous analysis".
The committee found while there would be "some impact" on the public hospital system the effects would be offset by $600 million in government funding to reduce elective surgery waiting lists and "$1 billion of immediate funding to relieve pressure on public hospitals".
The Australia Greens agreed "lower income households must be protected from being forced to pay the Medicare levy surcharge" but did not support passing the bill in its current form.
It wants Labor to redirect savings from the measure to the public health system, index the surcharge in the future and continually review elective surgery waiting lists "to asses the longer term impact of this bill".
The AHIA welcomed the committee's dissenting report, saying it confirmed the proposed changes "will result in longer waiting lists for public hospitals and higher private health insurance premiums".
The coalition has vowed to vote against the bill in the Senate.
