Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Hansard source

I apologise to the Hansard staff and to you, Mr Deputy Speaker, for my voice. Overnight I have developed quite a bad head cold. I have put my comments in writing to assist Hansard staff. The Private Health Insurance Bill 2006 is the main bill in the legislative package before us, and there will be cognate debate on it. This package was introduced very late during the parliamentary sittings late last year, and from what I can see was rushed through with only one day of public hearings. The bill implements a series of changes to current health insurance provision, including the expansion of private health insurance to cover medical services provided outside hospital—which can either substitute for in-hospital services or are designed to prevent hospitalisation—including health promotion and chronic disease management. This new offering is to be called broader health cover. As indicated, it will for people covered by private health insurance provide services outside hospital. It is probably one of the most significant elements of change in this package.

The other change goes to changes in Lifetime Health Cover rating whereby people who have retained private health insurance for over 10 years will no longer be subject to Lifetime Health Cover loadings. Thirdly, and very importantly, there is the introduction of requirements for private health insurance funds to provide standard product information to consumers.

The Minister for Health and Ageing says that the broader health cover represents the most significant shift in private health insurance policy since the introduction of the rebate and the Lifetime Health Cover scheme back in 2000-01. On behalf of the people I represent who are covered by private health insurance, I believe that these changes will be welcomed. But I do want to draw attention to my fear that the majority of my constituents, who do not have private health insurance, may be left behind.

The changes will mean a significant shift in what private health insurance can do, and subsequently a subtle but important shift in the balance between services funded predominantly through Medicare, such as GP, specialist and public hospital services, and services that in future will be provided and funded through private health insurance. I have always believed that the rationale for private health insurance coverage is that it gives patients additional choice but without necessarily providing a different kind of service per se from that available to non-insured people in the community and what they can obtain through the public hospital system. The notion of universality in quality health provision is, I think, an important principle that begins to be eroded by some of the changes proposed in this bill.

We are told that broader health cover means that private health insurance funds will be able in future to provide cover for medical services provided outside of hospital which are not covered by Medicare. In other words, people will have a broader set of options that will be covered by insurance as opposed to simply augmenting or providing additional services on top of those that currently exist for all people.

As I indicated, I have major concerns that this package represents the shift towards a two-tiered system of health provision. Why do I say this? On my understanding of the legislation, it will potentially make more services and treatment options available but only to people with private health insurance, and those without will not get access to those benefits. The broader health cover provisions in the package, we are told, will make available to private health insurance consumers a range of services not generally available through our public system, professional services for which a Medicare benefit is not payable. The explanatory memorandum indicates these include services such as chemotherapy and dialysis at home as well as preventative and chronic disease management programs. There is an argument that if people with private health insurance have better access not just to out-of-hospital services but also to preventative and chronic disease management programs which are generally not available through the public system, they will indeed end up having access to a better overall quality of health care, thus breaching what I believe is a fundamental principle that universal provision of quality care should apply to all in our community.

Of course the government and the Minister for Health and Ageing and the industry rail against the suggestion that this package represents a shift to 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 such insurance will not have access to then in my view the package does exactly that. If it is preferable in certain situations for patients to have access to chemotherapy and dialysis treatments on an outpatient basis, or in fact in their own home, why is the health minister happy to allow this for privately insured patients but not for all public patients?

The area of greatest concern to me in this legislation is the government’s plan to allow private health funds to offer cover for what is called ‘general treatments’. These are defined in the minister’s own words in his second reading speech as:

... tailored programs that support and sustain healthy lifestyles, services such as personalised health checks, dietary guidance, exercise supervision, and support to quit smoking.

With a greater focus on preventive health measures and better management of chronic conditions it may appear this is the way to go in the delivery of cost-effective health care. But this private health insurance cover is only for programs not covered by Medicare and is not available to all in our community. Again I ask: if such programs are deemed by the minister and this government to be important on medical grounds, why are they going to be made available only to those with private health insurance? I am concerned that some of these changes will disadvantage people that I represent, people without private health insurance and people in rural and regional areas who will not have access to many of these services and treatments.

We know from available data and from coverage in my own electorate that people with higher incomes are more likely to have private health insurance. This was confirmed back in 1998 in an ABS survey. More recent data from Roy Morgan Research shows that in the year 2003 having private health insurance cover continued to be strongly associated with higher income levels. When analysed by the income level of the main income earner, Roy Morgan Research showed that 23 per cent of people with an income below $20,000 had insurance while 76 per cent of persons on incomes of $100,000 or more had insurance—23 per cent at the low end of the income scale compared to 76 per cent at the top end of the scale. When analysed by total household income the research data showed that only 19 per cent of people with total household incomes below $20,000 had private health insurance compared to 68 per cent of people with total household incomes of more than $100,000. Interestingly, when I looked at this data I noted that over half—54 per cent—of all persons who hold private health insurance and reported a total household income below $20,000 were over 65, and most likely were aged pensioners. That is certainly the impression I have in terms of the extent of health coverage in my electorate of Throsby. I know that many people on pensions and fixed incomes go to extraordinary lengths to take out private health insurance to provide them with a degree of certainty in the event of any emergencies arising.

I have to ask: why is it that these new provisions will continue to be subsidised through the private health rebate to which all taxpayers contribute? Those with insurance and those without all contribute through the taxation system to the outlays that go to the health rebate. I think this is quite inequitable because not all taxpayers, as I indicated earlier, will receive the benefits of the changes—and we should remember that the private health insurance rebate in 2005-06 was in the order of $3 billion.

We can already see how a two-tiered system operates in the area of dental health provision. If you can afford private health insurance, which some in my community have, your dental costs are partially subsidised through the 30 per cent rebate. But if you cannot afford that option—and the majority of my constituents do not have private health insurance—you could find yourself among the half a million to 600,000 people languishing on our dental health waiting list for attention through the public dental system. The Australian Dental Association recently commented:

People who are disadvantaged by socioeconomic status experience greater levels of oral disease than those from more affluent groups.

It goes on to say that it is acknowledged:

… that “profound disparities exist across socio-economic groups in Australia … [as] the incidence of caries and periodontal disease increases as socio-economic status decreases.”

This, it says, is:

… referred to … as the “polarisation of the burden of [oral] disease”.

From estimates obtained through the Parliamentary Library, it seems that dental care now accounts for around 48 per cent of benefits paid out under ancillary coverage, which amounts in effect to an indirect subsidy in the order of $325 million to $345 million a year. So on the one hand the government, through the rebate, indirectly subsidises the dental health needs of people with private insurance and on the other hand the government turns its back on those most in need by refusing to reinstate and fund a Commonwealth dental program.

As funding has been withdrawn from public patients, subsidies for the oral health needs of privately insured Australians continue to grow. A huge divide has grown such that low-income earners without private dental health insurance are now 25 times more likely to have had all their teeth extracted than high-income earners with insurance. I use that analogy to show the impact of the differential operations of dental care to make the point that, once you move away from government funded universal provisions for all people in the community, it only stands to reason that those who have the means to avail themselves of private health insurance will continue to have better oral and general health outcomes than people who do not have such insurance.

The government and the Minister for Health and Ageing argue that the changes in these bills will not have any impact on premiums. In fact, the minister argued in his second reading speech that, by streamlining regulatory arrangements and enabling funds to operate more efficiently, the provisions in this package will reduce pressures on premiums. I find that amazing, coming from a minister of a government that promised back in 2001 that their policies would keep private health insurance affordable and put downward pressure on premiums. Yet every year since then premiums have increased by well above the rate of inflation—in aggregate, close to 40 per cent since 2001. It stands to reason, I think, that if the funds are able to offer a broader range of products then at least in the short term people will be expected to pay more for these services. This view is confirmed in submissions made by the AMA, who argued:

The health funds will have great difficulty persuading anyone that they can expand the range of services covered by their products without any increase in premiums.

Of course, after the next election, if the government has its way, Medibank Private will be sold. Many of my constituents are currently in that fund. In that transition to its sale, Medibank Private will lose its current not-for-profit status. Given it is Australia’s biggest health insurer, once it becomes a for-profit company this will inevitably lead to premiums rising, not just for the members of Medibank Private but for the whole sector. If the market leader’s premiums are rising then other insurers will surely follow. Community sentiment and expert opinion are against the sale, and that is no doubt why the sale has been put off until after the next election.

I need to alert my constituents with private health insurance to the fact that under this bill there is no restriction on the number of premium rises that can be sought by a health fund in any one year. In the draft exposure bill it was suggested that an annual contract be instituted guaranteeing 12 months protection to consumers on the premium rates that would be charged. Unfortunately, this measure was dropped—probably, I would suggest, due to pressure from the insurers. While in the bill before us the minister retains final authority over premium rises, the bill does not specify that funds must show justification for these rises. Nor does the bill provide details of any criteria to be used by the minister in making his decision, although the minister has previously made a commitment to the development of clear criteria against which premium increases will be considered.

Private health insurance is out of reach for many of my constituents, and that is reflected in the data about those who are covered and those who are not covered. Those who are covered face every annual premium increase with growing levels of trepidation, particularly pensioners and other people on low and fixed incomes. I have many submissions made to me on an annual basis complaining about the justification, or lack thereof, for the constant rises. In fact, I pursued increases charged by one of the insurers and, at a time when the minister was saying that the average rise was in the order of eight per cent, when I looked at the different levels of contribution, the average increase for one fund was in the order of 17 per cent. Many of my constituents also complain that they do not get value for money from their insurance policies.

As part of this cognate debate, we are also dealing with the issue of prosthesis application and listing fees, and I want to bring to the minister’s attention a couple of issues that came to my notice just recently. One case involved a 45-year-old woman who underwent an above-the-knee amputation. As we know, in Australia all amputees are eligible to receive a basic prosthesis, or artificial limb—although the specifics vary from state to state—in the $2,000 to $2,500 price range. This particular constituent of mine, however, was unable to get assistance through her private health fund—even though she was contributing at the highest level—for the fitting of her choice of prosthetic limb, which was a microprocessor-controlled knee joint. This new technology offers amputees much greater safety and function, and has a longer life, but it is expensive. It is important that people here in our community are not denied new technologies that are available to people in other countries.

The other case involved a constituent faced with the necessity of surgery to remove an embolus from an artery. Due to a two-year waiting list at the local public hospital, the procedure was carried out in a local private hospital in January 2006. He tells me he was charged for the titanium coils, as they were not listed at the time, as well as for the costs that he had expected in having surgery in a private hospital. On pursuing his case with the parliamentary secretary, I was surprised to be told:

There is no definition of ‘prosthetic’ in the legislation which supports current Prostheses Arrangements. Such a definition was not included in the legislation as it could become problematic if the way in which health services are provided changes. In addition, there may be a risk of precluding the listing of new technologies if they do not fit the definition.

I think I have gone round in circles in trying to assist both of my constituents in accessing suitable prosthetics to help in the treatment of serious illness.

In conclusion, while there is no doubt that the bill will provide benefits for many of my constituents who are currently covered by private health insurance, I do worry for them about the impact of further rises in their premiums, which, in my view, could only worsen once Medibank Private is sold. I also want to put on the public record my concern that this is possibly the beginning of a two-tiered system of health provision which might end up disadvantaging many of the people I represent who do not have private health insurance. At the core, I think the principle of universality of quality health care for all is certainly at risk as we move in the direction foreshadowed in the ‘broader health cover’ services and provisions.

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