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

This is very much like being hit around the head with wet lettuce. We have had a six-minute contribution from the other side on the Private Health Insurance Legislation Amendment Bill 2008, we have had very little opportunity to examine the problems facing private health insurance at the moment and, quite simply, we have the architecture of Australia’s health system being systematically dismantled. I am not about to say that the components of this legislation are necessarily controversial. Of course, some common-sense approaches to the way we regulate health related business in this country is sensible, and the moves within this bill to bring that under PHIAC and away from APRA is supported by this side of the House. But it is a shame that in this rush to get through a score of different pieces of legislation we have not even had a coherent discussion on how we see our blended Australian health system surviving into the next decade. We have not had any sort of discussion short of that usual blame shifting across the chamber, predominantly with the Labor government finding fault with the fact that there were not huge amounts of federal funding made available to state hospitals and therein lay with the former federal government the chief blame for everything that goes on within our state hospital systems. Memo to the government: the debate can continue to spiral to the bottom, and we can talk about nothing else but how bad each other is, or we can look at who is running what and how well they are doing.

It is a shame that on a day like today, when we consider this legislation, we have in my own home state material coming in to leading metro media talking about the difficulties that the Queensland government are facing in health provision. I know my neighbour, the member for Bonner, has already railed about cuts to the funding that ran through the Commonwealth-state health agreement, and I respect the point of view of people on the other side that the indexation of those payments was not as high as in the previous agreement. Under that agreement they were raised significantly to make up for the one before that which, under the previous Labor government, was far lower. So, while there was a significant catch-up in the third health agreement, there was simply restitution to the normal rate of health payment increase in the fourth health agreement, and that has continued to be used as the excuse for saying that money had been ripped out of public health by the federal government.

Whoever wants to blame whomever, what really matters is how well the money is being used. The very problem in Queensland is that we have articles on days like today just like the one in today’s Courier Mail that begins:

QUEENSLAND Health may be scrambling to recruit doctors but the embattled department is not short on the spin variety.

Figures reveal health has ramped up its army of media and public relations specialists and now employs more than a sixth of the Bligh Government’s—

entire PR spin team of 367 public servants.

The 69 staff, who spread the gospel on the resurrection of the public system while limiting fallout from hospital bungles, represent a 40 per cent increase from the 50—

staff who were being using just two years ago. This is post Dr Death. So I say to the Queensland government that it is not a matter of how much money you have; it is how well that money is used. We can continue to blame each other in this chamber, but in the end it is all about what is hitting the ground as far as rubber and traction in health service deliveries is concerned.

Premier Anna Bligh, whose department has 10 media advisers as well as five in the ministerial office, is insistent that all these people are required for informing, promoting and communicating. But it goes to the question of how well public health resources are being spent in Queensland. The answer is in the Australian. We do not have to go back far to see:

CANCER patients are waiting up to almost three times longer for life-saving treatment than they should be at some of Queensland’s biggest hospitals.

So there are benchmarks for what is clinically appropriate that are not even close to being met. The article goes on to state:

... patients are expected to wait ... 27 days despite the “maximum acceptable limit” of 10 days.

The article says that there are a significant number of patients for whom delay in starting will have a significant adverse outcome. The state health minister was unavailable, but the figures, of course, have prompted a storm. The response was:

The department said all category one patients were cleared immediately.

So what you first have to do is change your category 1 to a category that you can guarantee is served and then, of course, all your subsequent categories simply become longer and longer. This is simply robbing Peter to pay Paul. As the AMA has said in Queensland, these figures illustrate the poor planning as much as the chronic underfunding. And that is the basis for tonight’s debate. Tonight’s debate about the future of private health care is simply one of a longstanding and proud tradition in Australia of blended health provision. You can travel to any tertiary institute around the world and they will recognise just how well Australia has done. As the member for North Sydney pointed out only half an hour ago, that was built proudly on three policies, starting with the Private Health Insurance Incentive Scheme of 1997—introduced, I have to remind the House, because of constantly slipping private health levels that started back in 1975. This was a bipartisan consideration. We had private health cover potentially being extinguished within 15 years. Most would know that is not a good thing.

After the 1997 intervention, the Howard government followed up two years later in 1999 with a 30 per cent private health insurance rebate, and that replaced the means-tested subsidy for low-income earners. Then, of course, in July 2000 the final measure was Lifetime Health Cover. In disentangling which of these three policies are responsible for boosting private health cover back up to the mid-40 per cent—and, in some areas of Australia, 50 per cent—academics from the ANU suggest that it is probably the last, the Lifetime Health Cover, although it is a very difficult study to perform for obvious reasons.

The point I want to make is this: you have three policies to improve private health insurance cover in this country. You have one, which is Lifetime Health Cover, which effectively costs the government nothing. You have a second, the 30 per cent private health insurance rebate, which obviously is an expense to government. And you have a third strategy as well, which obviously is the one we are considering in this debate—that is, changing the Medicare levy surcharge, which effectively, in its current form, is a revenue earner for government. Which of those three do you think a government would sensibly remove or tinker with if it was looking to either obtain savings or make the system work better? Sure enough, the savaging of our private health system starts, curiously, out of the three policies with the one from which the government actually receives some revenue. So here we are, trying to be economically responsible, and out goes the one of those three policies that actually has a return to government. That one was savaged first. Building on top of the ‘alcocon’ tax, we are six months into the reign of this Minister for Health and Ageing, and I think average people are right to ask this question: what is going on in health care in the federal government? Where are we heading, who is in control, who is writing this individual’s material and are we just beginning to see the reign of potentially Australia’s worst health minister in history?

That is what we have after six months—a genuine concern that not only has something as integral and complex as binge drinking had nothing done for it except this appallingly mistargeted, misguided tax but we have the systematic unravelling of private health cover that we have seen with the legislation that was debated earlier this evening. My question to this chamber is: do they know what they do? I suspect the other side of the chamber has a poor understanding of the private health insurance system—apart from writing letters of comfort to them before an election—and my fear is that they do not really know what they are doing. That would be the great fear. The great fear is that the sensible move would have been to retract this legislation, tear it up and give ordinary people an opportunity to retain their private health cover.

Do not believe me simply because I am coming from Queensland’s golden heritage of state health provision; believe a letter that has come to a Western Australian colleague of mine. It says:

Please pass on ... Jenny G has just come into the office. She is very upset about the hospital system ... but I just wanted to pass on that she is a self-funded retiree and said she is struggling to maintain her private health insurance. She was very distressed to hear about the impact/consequences of the Labor Govt’s increasing the threshold for people through the Medicare levy surcharge. This will ultimately mean for her that her health insurance premiums will increase to a level where she cannot afford it ...

This is not rocket science; this is plainly obvious. As the member for North Sydney said, probably only an hour ago, when we go to renegotiate the private health insurance premium increases for those that retain it you can expect at least a five per cent increase over and above the normal costs of health—what we call health inflation—thanks purely to the intervention of the government. This is almost like delaying the inevitable and the government has not engaged that concern whatsoever. It has been left for another day. It has been left for the negotiations with the states, where they are presumably going to attempt to pay them off in some sort of agreement that sees private health insurance further on the decline.

It was interesting reading the budget papers, because this measure, appallingly, reads as a government saving. The fact that you can tear people out of private health insurance and savage the system actually delivers for the government a saving of $231.6 million purely from changing the threshold. So, of course, the Australian Health Insurance Association engaged an independent accounting company to see exactly how many rebate payments are required to achieve those budget estimates. They have calculated the government is going to require 613,000 rebate payers—we call them financial units; they could be couples or they could be singles. The great fear is that what Treasury did not realise when they did their analysis of this policy is that individual policyholders also include children. They include financial units, which is a terribly bureaucratic term, and those financial units will be trotting down to public hospitals seeking public provision of their care and waiting in public hospital queues.

Those numbers by AHIA’s estimates are 908,000 Australians or 9.7 per cent of the insured population. That is a very significant slice out of private health cover, and you have to go back a long time to see where we were when we had levels in the mid-30s. It effectively undoes 10 years of health policy; it effectively unravels 10 years of building the base for private health insurance for Australians who are prepared to pay their way in the health system. Of course, what is always ignored in the private health insurance debate is that, if one can look beyond the rebate of 30 per cent, it is ordinary Australians who are electing to pay the other 70 per cent. That is money the health sector would otherwise never see that is put in place for Lifetime Health Cover to cover those who elect to plan for the future and plan for those times when health expenses in the final years of life are enormously significant and beyond the ability of the average Australian to pay.

Now, in deriving the benefit costs of members who may potentially leave private health insurance due to these changes, what was necessary was to exclude from the calculations those over-65s who represent half of all hospital benefit claims. The calculation of the cost of this cohort is $484 million per annum. On the assumption that the budget papers are correct and they are chasing that $231 million saving to which I referred previously, then those extra 908,000 people have to get their health care from somewhere. The question is where? The question is: what services will they be seeking and what impact does that have on state planning? State governments we know from that shift alone will be looking for $440 million in 2008-09 just to cover that movement.

What is patently clear is that the government have not modelled any of the pullout ratios and the pullout velocities of people with insurance. They actually do not know if it is going to drop away suddenly and then flatline or if the great fear that we have in private health insurance cover will occur, which is the snowball effect, which I will come to later.

By engaging an independent company AHIA investigated the ramifications of these figures. The Treasurer has announced figures of 485,000 people who will pull out of private health cover, which we believe is around about half of the number that will. If it is the case that these financial units include children then the costs could be significantly more than are predicted. The second great challenge of course is that you do not know what the mix is of those who pull out of their insurance. Are they predominantly the young? Are they predominantly the healthy? Are they predominantly those who take the simple low-cost private health insurance option to avoid paying the surcharge, who are often referred to within the industry as Clayton’s members? Those individuals who are predominantly high-income earners may well be the most tempted to game the system, and here we have that dreadful term in health insurance policy or insurance policy in general which is ‘adverse selection’. There is a great fear that those who do not need the health insurance make that long-term decision to pull out now. What you simply leave behind is a smaller denominator of those covered who we know are going to need more services and it raises obviously the per capita cost of providing for them.

The double whammy is that many of those who are covered and will remain so are older, have been there longer, are more fearful of Lifetime Health Cover, which of course has not been addressed, and will remain locked into the system. They are predominantly senior Australians worried about their health. They read about the state health systems every day of the week and no $100 million measure with state hospitals is going to reassure them that they will get the surgery that they need. It is these people who want a cataract operation or a hip operation who will cling to their private health cover to the last, and these are the people whom I believe this government is particularly letting down.

What we have is an unknown. We have a genuine uncertainty about how many people are going to leave private health cover. It is one thing to be proposing in this legislation streamlining and making things easier for PHIAC and freeing up APRA from the responsibility of dealing with health related business, but it raises a greater question: where is the government going on health? As I have said before, there were 12 years to come up with a health policy. There have been six months now to determine where we are heading with our provision of health services at state and federal levels. We have had six months to talk about the big vision, the end of the blame shift and the end of cost-shifting. There has been no dialogue on that so far. My genuine concern is that it may never happen. When you have a short-term, spin orientated, poll driven government, as soon as that begins to unravel, away goes long-termism. While the government had strong support in the polls, that was the opportunity to be visionary. That was the time to lay down the road map for the future and to plan for the long term. If it could not be done by the government now in this six-month period, there will be very little opportunity for them to take these tough decisions when it really starts to bite. The great concern is that that may not be so far away.

What we looked for was a vision for health care. It is not that complex. The 2020 Summit pulled together every great health thinker. What we got was mainly health narrative. What we did not get were hard, crunchy ideas for where the health system could go. I think most people who read the summary of that summit said, ‘The health section let us down.’ Very little came out of that to look at reconfiguring health in a concrete way. Sure, there were broad statements and broad brushstrokes, but where is health going to be 12 months from now? As I think we have already seen, average, everyday Australians should have plenty of concerns. If they are planning on keeping their private health cover, they should have genuine concerns. If they are looking for after-hours GP care, they should have genuine concerns. If they are looking for a way of supporting the GP centred healthcare approach, they should have genuine concerns. If they do not, I think they should read the Access Economics report that came out analysing the budget.

The AMA is oft trumpeted for supporting the alcopops tax, but that was only because there was a promise that perhaps some of the derived tax might end up with public health bodies. You do not see public health bodies out there fighting for the alcopops tax. They are merely saying that anything that collects some revenue for public health is a good thing. That is different to support for that tax. The AMA said in the executive summary alone of its report:

The sharp increases in the thresholds for the Medicare levy rebate sends a very confused message.

This is six months into government; it is not three years or six years. The AMA also says the government is ‘struggling with prosperity’. It is like there were a few years of economic sunshine after Australia’s debt had been paid off, with provisioning for the future, and then within months down went business confidence and retirees and seniors were told: ‘You missed out. The times of prosperity are gone. You derived nothing from it and now it is hard times again—tighten your belts.’ That has been the effect of this government—struggling with prosperity rather than managing it. Those are the words of the AMA. The AMA also said:

First, the Government felt that it had no option but to deliver on its election promises.

It is as if the only way through was to honour election commitments even if they now felt they were bad for the country. The AMA said:

The estimated net saving in 2008-09 is highly implausible.

It also said:

The estimates of rebate savings are “doctored”.

That is not me saying that; it is the Medical Association’s own paper prepared by Access Economics based on those policy costings. It also said:

In the past when PHI subsidies have been pared by governments, the impact has been like a rolling snowball.

‘Snowball’ is a term I said I would come back to. The fall in private health cover could well be a rolling snowball, impossible to arrest. Because of the denominator shrink, one simply sees more and more people struggling to meet those costs each year. That will be the great fear for Australians and health planners.

What we need to know here tonight is whether this government has a plan at all. Does it have a plan for health, a direction, an answer for cost-shifting, an answer for recalcitrant states, an answer for ordinary Australians who want to know that their public health system can look after them? Until that guarantee can be made, this government will be letting down Australians. Half of them relied on private health cover and that option is being taken away by the measures put forward by this government tonight.

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