Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

There is nothing controversial about the content of the majority of the Health Legislation Amendment (Private Health Insurance) Bill 2006, but what stands a chasm apart is the position of both sides of this chamber on private health insurance. It has been extraordinary to listen to the complaints around the edges from those on the other side of the chamber on private health insurance—complaints about the cost of private health insurance without acknowledging the extraordinary increases in costs for all health care right across the board. It has been extraordinary listening to complaints about gaps when those opposite will not support a safety net. It has been extraordinary to sit here and listen to complaints about exclusions when these are elements of every insurance policy, even beyond the health sector. And it has been extraordinary to listen to the compassion from those opposite about consumers and the complaints that consumers were not consulted on the role of a Private Health Insurance Ombudsman when they would like to have the entire private health insurance sector eliminated completely. Yet those opposite came here yesterday and complained about rights for the consumers, the very consumers they would like to have eliminated altogether in order to have everyone accessing public hospital care and nothing else.

Finally thrown into the criticism of this bill by those opposite this morning was that Medibank Private potentially would be sold and result in an increase in rebates—for which they have no evidence. It is quite clear that the sale of Medibank Private could well increase competition, particularly if it is purchased by a new provider of private health care services in this country. But this feigned compassion for Medibank Private could well be due to many on the other side of the chamber actually enjoying having their own private health insurance, not wanting to see any of that sector lost and yet, at the same time, having the effrontery to come into this chamber and rail against it.

Mr Deputy Speaker, you do not have to go back very far for memories of Medicare Gold. I have no doubt that the member for Lalor has an extraordinarily strong conviction that her policies are good for a country; my problem is that they are not good for this country. Her policies may well be great for a country where one can walk along the Malacon and then sit listening to music in the Casa de la Trova. Medicare Gold may work in Havana; it will not work here. Medicare Gold proposed—I do not want to go into great detail—shifting people over the age of 70 into a combined promise of private health care, which would be fully paid for by the public health system, with the hope of wiping out private health insurance on the side. Costings were vague and amorphous. Even today the idea of Medicare Gold percolates up from the deep, because there is no agreement on the other side of the chamber whether to put it to death or not. We do not have a clear answer on that at all. Medicare Gold promised, for somewhere between $2 billion and $6 billion—we never got more precision than that—to allow anyone over the age of 70, without discussion of clinical need and with a triage system based purely on age, their own room and choice of doctor. This potentially would all be at the expense of our private health insurance system.

One does not have to go back very far to remember the days of 30 per cent—and falling fast—private health insurance coverage in this country; it was falling by two per cent a year. I would call that a death spiral, as it had been doing so for some time. One relies on a base to maintain a critical mass and efficiencies within private health insurance. How does one support a private health sector when levels of coverage fall, as we have seen in other OECD economies, to 10 or 15 per cent? That is when private health insurance becomes a service for the rich. But that is not what happens in Australia. Australia, through a policy trident of Lifetime Health Cover, community rating and a rebate that makes services affordable to Australians, has pulled across 44 per cent of the population. The average earning Australian can now be indifferent. Half choose to purchase private health insurance; others choose some other service, such as affordable independent schooling. These options are now available to Australians, when they could only dream of them 10 years ago.

We do not need a long memory to remember what it was like to have long queues in public hospitals in states across Australia. No matter how many people have taken up the option of private health cover, states’ commitments to their own hospitals have been ratcheting back and the queues remain. We have gained no commitment from states to shorten their waiting lists. I highlight Queensland as an example. They will not fire visiting medical officers; they just ratchet back their hours, providing fewer and fewer services. At the same time we see longer waiting lists and secret waiting lists—and not thousands, not tens of thousands but over 100,000 Queenslanders ‘waiting for Godot’ for the chance to actually get onto a list for an operation. Those on the other side of the chamber have the effrontery to talk about exclusions in policies, when we have in our state health systems the ultimate exclusion—you cannot even get in the door of a public hospital to get your operation. Waiting lists have ceased to be waiting lists; they are simply rotating lists, with people who are absolutely at death’s door being popped on the top of the list and everyone else just floating in a waiting list that never moves.

In the last 10 years, the notion that was once commonplace amongst socialist thinkers—that there was an inexhaustible appetite for health care services and one could never provide enough health services without completely breaking the bank—has been utterly exposed as a hoax. Average, ordinary earning Australians in the middle quintiles right down to 20 per cent of Australians in the poorest quintile walk out the door, pick up the phone and elect to have private health cover. It means so much to them that they are prepared to pay for it out of their own pocket. We have seen that these very Australians contribute back into Australia’s health system—not $5 billion and not $6 billion but $9 billion every year.

To those simplistic socialist thinkers, who even to this day talk about eliminating private health cover and redirecting the 30 per cent rebate back into our needy public hospitals, I put this simple piece of maths that has never been tested on the other side. If I were to redirect $2.6 billion or $2.8 billion currently spent on the 30 per cent rebate into those needy public hospitals and spread it thinly across the country, do you think those waiting lists would change materially? I tell you what: things would not move faster but, by moving 40 per cent of Australia back onto the public hospital queues, those queues will become longer—and I will tell you how much longer. They will become $8 billion to $10 billion per year longer. We are spending $20 billion a year on hospitals at the moment and I put to you that we would have to spend $30 billion. Congratulations to the other side, who would find $2.6 billion by eliminating a private health insurance rebate. Where would the other $6 billion come from? It could only come from tax. It could only come from wiping out tax cuts that were offered in the last budget. It could only come by restricting services, at which the other side of the chamber appears to be expert at state level. So where would the money come from?

I think we need to see two things from those on the other side of the chamber: first, that they relinquish their hostile ideological conviction to wiping out private health care; and, second, that they work out whether there could be a better system. At the moment all they have offered is Medicare Gold, the solution that is no solution—the solution they were so ashamed of that they had to release it just a few weeks before the election and hope it slipped through without proper scrutiny. We have had plenty of time to think about Medicare Gold now, and we know that there is far from agreement on the other side of the chamber on that policy.

It is also worth noting just how quiet the other side has been on private health insurance completely—in fact, on health more broadly. What do we hear from the other side of the chamber about health? Where are the questions about health care? Where are the questions about quality of care? They have all just dissipated with the shame in the hangover of Medicare Gold. Medicare Gold may work well in some countries; it certainly will not work well in Australia.

This bill does not have many controversial elements. This was a widely consulted change regarding the power of the ombudsman. It increases the ombudsman’s effectiveness to be able to conduct investigations at their own initiative or at a minister’s request, but they can now place scrutiny not just upon funds but upon all service providers, although obviously not upon clinical complaints. That is and will remain an issue for medical boards. It is about making the decision to take up private health care more satisfying, more fulfilling, and it eliminates some of the great questions and concerns that people who take out these insurance policies have.

I had a personal experience in this area two weeks ago. I was renegotiating my private health cover, for the first time on the telephone, and I was taken through the list of exclusions exhaustively. I tried to get through the phone call quickly, but the fund was methodical in explaining to me the exclusions. That is the same as when I take out car, boat or house insurance. This patronising notion that there are so many tricky exclusions out there that we cannot rely on ordinary Australians to take out an insurance policy is part of the problem on the other side.

I am not for one minute saying that there are not issues of communication. I am not for one moment saying that we should not be developing resources that allow a more complete explanation of products and services. And I am not for a moment saying that we should not be improving the powers of the ombudsman. That is what the bill is doing. I know those elements are not controversial on the other side. No, my attack today is on the notion that persists on the side—though it is rarely articulated because it is so poorly received in the community—that taking up private health insurance is a poor customer decision, the result of knowledge asymmetry, of being fundamentally foolish with your own money.

Let us look at this claim in a little more detail. Let us take the figures of equivalised household income by quintile and of how much Australians actually spend on their health care. Of course, the notion that will be put by the other side of the chamber is that money spent on private health insurance is simply a redirection of resources to the rich. This myth has not died. There are four big myths around private health cover that continue to be peddled by the other side of the chamber and by sycophantic, left-wing health economists and academics who continue to print this nonsense, which is completely ignored by Australians, who continue to take out policies because it is the right thing for them and their families.

The first myth is that there is an insatiable appetite for health care services and that the only way to prevent an overwhelming drive and demand for health care services is to ration them, to do what state hospitals do—pretend you have an open door but not have it open at all. The second myth is that of the worried well—that private health insurance simply treats people with tiny and insignificant conditions, that the wealthy can simply access a private hospital immediately and have world-class care for non-emergent, non-significant pathology. The third myth is the myth of two tiers—that private health insurance creates one level here and one level over there, with the rich operating in their own stratospheric level of health outcomes. The fourth myth is the misspent dollar, the myth to which I have already alluded—the myth that one dollar spent on a rebate for private health cover is a dollar that would be far better spent in a state public hospital.

I would like to devote a little attention to those four myths today, because they are being broken down, not by some concerted campaign of letter writing or by sympathetic academics who write articles about how wonderful private health insurance is. To the contrary: these myths are being undermined by Australians who are making their own decisions, who, when clearly offered choices, are demonstrating their ability to do so.

The first issue here about what private health has shown us—and 44 per cent of Australians now have cover—is that, far from there being a tsunami of health demand at private hospitals, Australians do not wake up in the morning and say: ‘I’ve got nothing better to do. I’d like to go and sit in a queue to get my eyes looked at or to have my elbow looked at.’ No, Australians go there for genuine cases. Seventy per cent of operations for cataracts and 60 per cent of operations for hips and knees—all of these serious operations that affect the quality of life of Australians—are being done in private hospitals with few in their queues. If anything, the private hospital sector is showing us how it should be done. It is showing that there is not some overwhelming, insatiable appetite that, allowed to be unleashed, would completely consume Australia’s GDP. What a preposterous public health socialist notion that still hangs around today. No, people who have private health cover are making responsible choices and getting the services they need, and I think those on the other side could actually learn a lesson from the efficiency that private health has delivered to the market.

The second myth, that of the worried well, is that there are not significant cardiovascular cases being done in private health, that they cherry-pick the high-return cases and do not do anything else. Nothing could be further from the truth. These private hospitals are doing a range of procedures—the expensive and the technical right down to the rather simple. I challenge anyone on the other side to come into a private hospital on any non-sitting day and point out the private hospital case that should not be done. Come and look at the waiting lists, come and look at the operating lists and come and tell me there is a  patient there who really should not be getting that operation, who really should be back on the public hospital waiting list, waiting forever—waiting until they fall off the perch, give up in disgust, go and take out private health insurance or perhaps fly overseas to have the operation. For goodness sake, what a ridiculous notion. I put that challenge to the other side: phone me, let us visit a private hospital and look at an operating list. I ask those on the other side to make the call on who should not be getting that procedure. Privately or publicly covered, they should be getting that procedure; they should not be denied it. Private health has simply shown us a way of doing it efficiently, and I support it completely.

The third myth is this myth of two tiers—that, by having private health insurance, suddenly the wealthy Australians float away with wonderful health outcomes and everyone else does not. Of course there is a challenge here that we need to be funding public hospitals, and the federal government has increased hospital spending by 25 per cent to 27 per cent—and, in the previous hospital agreement, by 36 per cent—over and above inflation, over and above the CPI. That is a reflection of increasing costs, which are seven to eight per cent a year. So when private health insurance rebates go up by eight per cent a year, don’t say, ‘What a profit grab.’ Have a look at the efficiency of the private hospital sector that operates on margins as thin as ice. What is happening is that this is merely reflecting the cost of health delivery. The finest health care is available in this country and, yes, the cost goes up by eight per cent every year. But 44 per cent of Australians bear it out of their own pocket because a rebate makes it affordable.

Public hospital care is also going up at exactly the same rate—by six, seven or eight per cent a year. So all health care costs go up at this rate. Let us stop having this private health exceptionalism line being run from the other side—that it is all profit-grab, that all of this 30 per cent rebate is simply captured by shareholders of private health insurance funds. We need to break through that notion and start looking at health outcomes. The private sector is showing us that it can be done far better than we are doing it in many of our public hospitals today.

Let us not forget that 50 per cent of those aged between 40 and 70 now have private health care cover. This is not some choice of the rich. This is not whether to get a Ferrari or a Porsche. Twenty per cent of the poorest Australians pay for these premiums and elect to have private health cover. So make no mistake that this is some choice for the wealthy, that this is some transfer to those who least deserve it, because in the end what has been developed with this policy trident in the late nineties is that ordinary Australian families can now contemplate having private health cover and taking responsibility for their own cover. Sure, they will use public services at times, but for the great majority of their clinical care, particularly at the hospital level, they are electing to cover themselves. They are electing to add $9 billion a year to the Australian health care pot which, were there not private health insurance rebates, would not be there at all. We would have a completely different private hospital system. We would have an elitist private hospital system with just a small percentage of Australians accessing private health cover. This side of the chamber would never want to see that occur.

The last myth is probably the most frustrating all. I have alluded to it already: the myth of the misspent dollar—the myth on the other side that, if it were not for the public opinion and public sentiment that is so pro-private health insurance, we could eliminate it quietly and capture back that $2.6 billion and funnel it across into our needy public hospitals, which simply have not had the state commitment to fund them as they should. Where would we be with private health cover falling from 43 per cent to perhaps 10 or 15 per cent? That would be 30 per cent—yes, 6 million Australians—joining the queues in public hospitals. Do you seriously think that $2.6 billion would cut it? Do you seriously think that $2.6 billion could actually cover that many Australians seeking operations and procedures, VMO visits and outpatient visits through our public hospitals? You have to be dreaming if you think that it could be done for $2.6 billion. It could be done for $9 billion and, as I have put to you before, that $6 billion would be found out of taxpayers’ pockets. We would be back to where we started 10 years ago: with falling PHI and increasing taxes. We would be back in that mess that we were in 10 years ago. I do not think Australians want to go back there at all.

What is clear now is that, in any economic sense, making something affordable increases the appetite for it. Government is not paying for the premium completely. We know that, by putting $1 billion into private health insurance rebates, private health cover goes up by approximately 10 per cent and into the health system goes $3.3 billion of client contribution. It is an extraordinarily sensitive lever. Once private health insurance becomes unaffordable then middle Australia starts to lose out. It is the policy interventions of this government that have made private health care affordable.

It is a fine model worldwide. There are very few countries in the world that can now boast 40 to 45 per cent private hospital cover and 40 to 45 per cent independent and non-state school educated children. What we have is two sectors with the balance—two sectors offering choices, two sectors competing against each other for quality. As I finish, I would like to point out we can be completely comfortable with students moving into the independent school sector and taking with them funding to their schools, but there is still an ideological resistance to a cent going into the private hospital sector. That is the great inconsistency of the other side, and for that reason I support this bill. (Time expired)

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