Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Minister for Health) Share this | Hansard source

The government is right in stating that this package of bills represents a significant change to the private health insurance policy and probably the most significant change since the introduction of its private health insurance rebate and Lifetime Health Cover scheme in 2000-01. The Private Health Insurance Bill 2006 will allow private health insurance to cover medical services provided outside hospital which either substitute for in-hospital services such as chemotherapy or dialysis provided in the home or in community settings, or services which are designed to prevent hospitalisation in the first place.

Under broader health cover, private insurance funds will be able to provide cover for many medical services provided outside of hospital for the first time. Broader health cover will also provide insurance for services designed to prevent people needing to go to hospital, including chronic disease management programs and health promotion programs. How direct this prevention will need to be to come within the package is something that is unclear from the legislation as it stands.

It is a significant change in the way that we think about health care—trying to find better ways to keep people out of hospital and manage chronic illness out of the acute sector—but it is telling that the government has only seen fit to go down this path for private insurance rather than for the entire health system. Clearly, the insurers can see that it suits their policyholders as consumers of health services to stay out of hospital if they possibly can, and it makes good economic sense for them too. Intriguingly, even though the Howard government seems to clearly recognise this for the private insurers, it does not seem to mind that the rationale that it is giving to these changes is the very rationale for Labor’s call to embark upon some wider reforms in health that it is ignoring, particularly through the state-Commonwealth divide—but more of that later.

Labor support this package of legislation as we believe it could provide significant benefits for the 44 per cent of the Australian population who currently have private health insurance. The 30 per cent private health insurance rebate has meant that the percentage of policyholders in Australia in recent years has gone up significantly—and we know that families have factored the rebate into their budget, the very family budgets that are constantly being squeezed in many directions by this government.

Labor have supported the 30 per cent rebate on private health insurance at the last two elections and will support it again at the next election. Labor accept and understand that many Australians have come to rely on this support, and we will not take it away. Nevertheless, we are pleased that this passage offers a glimmer of hope that those who do have private health insurance might be able to get better value for their money. Longer term, if it means that we manage chronic illness better and keep people from multiple readmissions to hospital then that will be desirable for the health of the nation as a whole.

However, Labor has a number of concerns about the package, which are encapsulated in the second reading amendment that has been circulated in my name. I will read the terms of it because it sets out the concerns that Labor has. I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House notes:

(1)

that while the expansion of private health insurance to coverage of services provided outside of hospital will have benefits for the 44% of Australians who have private health insurance, it will not provide access to the same kinds of services to the majority of Australians who don’t have private health insurance;

(2)

the expansion of private health insurance to cover a broader range of services will likely lead to further increases in private health insurance premiums;

(3)

the bill pays scant attention to safety and quality issues for services provided under the rubric of Broader Health Cover;

(4)

the bill does not include sufficient protections for the freedom of doctors to make clinical decisions about the treatment/s that will be in the best interests of their patients in relation to services provided under the rubric of Broader Health Cover; and

(5)

the $50 million the Howard Government provided to the private health insurance industry in the last budget to advertise their products is a waste of taxpayers’ money and an appalling use of scarce health resources”.

The House will note that Labor’s main concern is not primarily about the content of the package but about what happens to those who are not insured and therefore not covered at all by these changes. The expansion of private insurance to out-of-hospital services will mean a shift in the balance between services previously funded predominantly through hospitals or Medicare and those services able to be funded through private health insurance. The shift raises equity issues around access to services equivalent to those under the broader health cover changes but for people who do not have insurance. Undoubtedly, people who do not have insurance even after these changes will be able to continue to access services such as chemotherapy and dialysis through the public system in hospitals. But the privately insured will have options that may well not just become a choice, for example, of a more comfortable venue or a particular doctor but have significant health impacts, especially if they have better access to preventative and chronic disease management programs. The argument can then be made that they may have access to a better overall quality of health care than those who are not insured.

The logical extreme, if we take it to the extreme of this argument, is that people who cannot afford private health insurance may be more likely to end up in hospital because, unlike those with private insurance, they might not be able to access programs which could prevent them from having to go to hospital in the first place. It is this element of the package which I think the House would be able to understand that Labor is most concerned about, for very obvious reasons. We believe it represents a departure from the current balance between public and privately financed services where the rationale for private health insurance and the government’s particularly publicly stated rationale is that it gives private health insurance consumers additional choice. Without attention to and change in other areas outside the health insurance area, universality as a core part of our system could be threatened. Of course, not surprisingly, the government rails against any suggestion that this package represents a shift towards a two-tiered system of health care. But if the broader health cover provisions give people with private health insurance access to services and treatment options which people without private health insurance may not have access to then the package will be doing exactly that.

As I have mentioned already, we will support this package because we want those with insurance to get any improved benefits that they can. We support them getting value for money for their premiums, which are always going up. We expect that it will have significant benefits for private health consumers. In particular, we believe that it could lead to important innovations in care and services provided outside the hospital gate. However, having introduced these changes for people with private health insurance, we urge the Howard government to work towards addressing access to these kinds of services for the uninsured.

There are other parts of this government package that Labor is critical of as well. As I said, we are absolutely appalled about the $50 million that was included in the last budget for the private health insurance industry to advertise its products. This is a disgraceful waste of taxpayers’ money and of scarce health resources. These are private businesses who can easily advertise their own products, and $50 million is not an insubstantial amount of money. For example, it could provide relief to struggling families under pressure of increased healthcare costs. We have seen today yet another example of costs that are constantly putting ordinary working families under pressure. The cost of living is going up in so many ways. We now see that the cost of medications is going up. Patients are now paying hundreds of dollars extra to get some very common medications. That burden could be eased by the $50 million. The $50 million could also pay for 1½ million GP consultations. The $50 million could help fund potentially life-saving research into any number of preventable diseases and it could fund a whole series of public awareness campaigns on important health problems such as obesity and diabetes. It should not be used just to line the pockets of private health insurance companies.

Yet, while the government is happy for the money to go to the insurance companies for this advertising campaign, it seems a lot less concerned about the hip pockets of private health insurance consumers. For example, the government insists that this package will not have any impact on premiums. In fact, in his second reading speech, the health minister went as far as to argue that some of the changes in the bill will actually reduce pressure on premiums. The last time the government said that one of its policies would reduce pressure on private health insurance premiums was in 2000-01. Since then there has been over a 40 per cent increase. That is one hell of a broken promise on not affecting premiums.

Between 1998 and 2006 the cost of private health insurance increased twice as fast as general inflation. The fact is that the government cannot be trusted on private health insurance premiums. Given this track record, why should we believe anything Minister Abbott says about what this package will do to private health insurance premiums? Is it not counterintuitive, even at a basic level, that expanding the services offered will, in the first instance, actually reduce premiums? If we really manage people’s care well and if the innovation that is promised does ultimately deliver in the future, there may well be decent long-term savings and they might be significant. The insurers no doubt have this in mind in wanting to go down this path. But in the short term it will not have this impact, and in the long term there are no guarantees—certainly none in this legislation—that any savings will be passed on to consumers.

Labor does not believe Minister Abbott’s predictions at all and is concerned that this expansion of services will lead to further increases in private health insurance premiums. Further, the government says the private health insurers will benefit from the regulatory changes included in this package. This may be true, but, according to the government’s own explanatory memorandum, the cost to funds of complying with the current regulatory regime is only around one per cent of total benefits paid. So, even if this figure falls below the one per cent, as the explanatory memorandum notes it might as a result of the changes in this package, this is so small that it is hardly likely to lead to significant downward pressure on premiums.

Further, despite the minister’s rhetoric about wanting to protect consumers by retaining his role in reviewing premium increases, this bill actually weakens the existing legislative framework in this regard. Under the National Health Act currently, one of the objectives of the Private Health Insurance Administration Council is to minimise premium levels. However, in the Private Health Insurance Bill that we are debating, this objective has been removed from PHIAC’s remit. One does have to question how serious the government is about keeping premiums down if it is not prepared to include these kinds of consumer protections in the bill. It is not as if we are suggesting a new protection here; this has actually been removed from the existing objectives that set out what it is that the Private Health Insurance Administration Council has some responsibility for. Labor will be moving to address this issue during the third reading debate. It is very clear to us that wherever possible we should do all that we can, and the government should do all that they can, to minimise the premiums that ordinary Australians need to pay.

The government do not have a good track record on health costs. I have already mentioned today the issue of medication costs—what has got out of control on the PBS on the government’s watch, even though the government promised that their changes would keep these very sorts of increases under control. We have heard recently, for example, about how the Medicare levy surcharge, originally meant to apply to wealthy Australians who did not take out private health insurance, now hits many people below the average wage. Why is this? There is good news that the average wage has risen, but the government has refused to recognise this and has refused to index the threshold. So more than 280,000 taxpayers were slugged with this surcharge in 2003-04. Instead of it being something that is targeted at the wealthy, as the minister at the time promised, it is now the case that those who have less than average incomes are forced to pay this levy. Private health insurance premiums are also at risk of rising even further if Medibank Private is sold, which is precisely what will happen if the Howard government is re-elected later this year.

I would like to turn now to a number of specific issues relating to the package and note that the inquiry by the Senate committee that is reviewing this package of bills is still under way and is not due to report until 26 February. Given the complexity of the package, Labor will reserve its options in the other place to move further amendments if other issues are flagged by the committee as needing attention.

We have particular concern about the quality and standards issues. We are concerned that the bill pays scant attention to the standards and qualities of services which will be provided under the rubric of broader health cover and outside hospitals. It is easy for the public to understand that, if services are going to be provided outside hospitals, we need to ensure that consumers get the protection of strong and appropriate standards. The legislation does not provide for any quality assurance mechanisms for broader health cover products to take effect until July 2008. In other words, there will be a 15-month time lag between the implementation of the cover in April 2007 and the implementation of standards and quality provisions that will apply to those who are actually going to be providing the services to consumers. Obviously, we believe that this represents a completely unacceptable risk to consumers of private health insurance, and we will move an amendment during the consideration in detail stage to address this issue.

Another issue is that of clinical autonomy for doctors. Labor shares the concern of interest groups such as the AMA about the lack of sufficient safeguards in this bill for doctors to expressly continue to make clinical decisions about the best interests of their patients. Various groups have raised concerns about this package. Some have said that it runs the risk of being a move towards managed care—in other words, a system whereby the private health insurer assumes responsibility for the health care of its members; for example, through direct contracting arrangements with doctors and other providers. To assure the public and the Labor Party that this is not the intention of this bill, it is important to specifically have a provision which protects the clinical freedom of doctors—whether it is from the health funds, any other groups or governments. It will always be a matter for doctors to determine the best course of treatment for their patients. The fact that doctors are able to determine the best course of treatment for their patients is a fundamental part of our health system, and we think it needs to be protected explicitly. Labor will move an amendment to strengthen the bill’s protections on doctors’ clinical freedoms.

There are a number of other less significant but still important parts of the package that I want to mention briefly before concluding. In addition to the introduction of broader health cover, the bill contains two other policy changes of note. The first is an introduction of a requirement that private health insurance funds produce standard product information on their private health insurance products. This requirement is very sensible. It is designed to make it easier for consumers to compare different private health insurance products and understand what their entitlements would be. Labor strongly supports the introduction of these requirements as they will be of significant benefit—and, I might say, probably be of significant relief—to many consumers who have tried to find their way through the myriad packages on offer. The bill will also introduce a change to the Lifetime Health Cover scheme whereby people who have retained their private health insurance for over 10 years will no longer be subjected to the Lifetime Health Cover loadings on their premium even if they took out insurance after they turned 31. Obviously this will be welcomed by those who qualify for that, and Labor supports this change.

There are also a number of regulatory changes in this package. The bill will streamline the private health insurance legislative framework by bringing the main components of the existing legislative framework for the new policy proposed by the package under one act. Labor supports these changes. The package will also introduce a change to the risk equalisation or reinsurance arrangements. Labor supports a change in this area as it will result in a better distribution of the overall insurance risk than the current formula and so it is an improvement on the current arrangements. But I have to say that we are somewhat surprised that the government has chosen to adopt this particular model in the legislation when it clearly was not the government’s preference.

The explanatory memorandum itself—I think for the first time since I have been here—expressly says that the government would have preferred a different model, the capitation model, as it believes that this would have been, and I quote, ‘the best strategic option for the longer term’. Instead it has opted for a different model: the model that the industry says is the best one. There may well be good reasons for that. I am sure the government were convinced that there were good economic reasons for so doing, but it seems to me very strange that the government are prepared to say, ‘We actually prefer this. We think it is a better model. We think it will make our system sustainable,’ and then opt for something else. It might be a difficult decision for the minister or the government to make. But, if there is a clear option which the government are convinced is one that is actually going to make our health system more sustainable in the future, why haven’t they had the guts to pursue it here?

I think some of the technical parts of this package will be scrutinised more closely in the Senate committee that is currently under way, and obviously we will keep an open mind about those issues if the committee makes recommendations in that area. As I said, I do think it is very strange to not have the government pursuing the option that they have identified as the best one. There has not really been an adequate explanation for that given by the government so far other than that the industry prefers something else. We are fairly confident that the industry generally is very supportive of this package, and the government has made it quite clear that it has worked very closely with them. However, we still have a responsibility to make sure that whatever we do is sustainable for the future, and this seems to be one area where maybe the government have just opted for an easier option. They have not put on the record that this is a transitional step to something else. Obviously we look forward to any comments that the minister might be able to make to enlighten us as to why this option has been pursued.

Overall I think I have made our position clear. I will conclude here by saying that Labor support the package. We think it is important that a range of health decisions start being made that focus on prevention measures and keeping people out of hospital. We know that it is much more desirable, where decent services can be provided, not to have to have people in hospital. Of course there will still be many times where people do need to go into hospital. But Labor are concerned about the equity impact of this package. We want to make sure that those who are not insured still get the best quality services as well. Private health insurance should be able to provide people with choice and different options, but not a whole range of different health services that are not available to others. That is the great undone work of this package that we will be pursuing the government on, and we expect to see some action in this other area if they want to pursue these changes in the private health area.

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