Alby Schultz (Hume, Liberal Party) Share this | Hansard source

I rise to speak on the Fairer Private Health Insurance Incentives Bill 2009, the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009 and the Fairer Private Health Insurance Incentives (Medicare Levy Surcharge—Fringe Benefits) Bill 2009. At the outset I must say that I do not accept that what the government is proposing is fair in any sense of the word. These three bills propose changes to various acts in order to implement a 2009-10 budget initiative that changes private health insurance incentives and penalties.

The government has proposed a number of changes to private health insurance in this budget that are intended, it says, to make private health insurance more sustainable. Some of the proposed measures include the removal or reduction of the private health insurance rebate for higher income earners who have private health cover. At the same time the Medicare levy surcharge will be increased for those who do not purchase private cover. Medibank Private will be changed from a not-for-profit to a for-profit insurer and regulatory changes will be made that affect how private health insurers can utilise surpluses.

From July 2010 three new tiers to the private health insurance rebate will be introduced. These will result in higher income earners—singles with incomes over $75,000 and couples with incomes over $150,000—progressively receiving a lower rebate. Once a single has an income over $120,000 and couples have an income over $240,000 the rebate will be abolished. At the same time the government will progressively increase the Medicare levy surcharge, a financial penalty applied only to high-income earners who decline to take out private health insurance. As a result of these changes to the private health insurance rebate some 41,865 residents in the Hume electorate with private health cover will pay a heavy price for the Rudd Labor government’s sustained attack on private health insurance. This represents 46 per cent of people aged over 18 in the Hume electorate. These ordinary Australians will be faced with higher insurance premiums after the Prime Minister broke his election promise not to change health insurance rebates, and slashed them savagely in the budget.

The dismantling of the 30 per cent rebate on private health insurance premiums will have an immediate impact on at least 1.7 million Australians or 10 per cent of the population. The Prime Minister, not surprisingly, was dishonest with the Australian people. He promised again and again that he would not touch the rebate for private health insurance. In a letter to the Chief Executive Officer of the Australian Health Insurance Association, Dr Michael Armitage, dated 20 November 2007 Kevin Rudd, the then opposition leader, said:

Dear Dr Armitage,

Thank you for your letter of 29 October 2007 seeking clarification on Federal Labor’s policy regarding private health insurance.

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per rebates for older Australians.

Federal Labor will also maintain Lifetime Health Cover and the Medicare Levy Surcharge.

Labor will maintain the existing framework for regulating private health insurance, including the process for approval of premium increases. Zero per cent premium adjustment is not Labor policy.

I understand Nicola Roxon’s office has also confirmed with you that Federal Labor has no plans to require private health insurance funds to make equivalent payments to public hospitals for patients who elect to be treated as private patients.

I trust this allays your concerns. Federal Labor values its relationship with the private health insurance sector and we look forward to this continuing regardless of the election outcome on November 24.

Yours sincerely

Kevin Rudd

Federal Labor Leader

Member for Griffith

Do not believe what Kevin Rudd says; look at what he does. This election promise backflip will mean that most people will face an automatic increase in insurance premiums of up to 42 per cent for some, while those people who are forced to abandon their private health cover will face a tax increase through the Medicare surcharge levy of up to 50 per cent. Every Australian will eventually pay the price for the Rudd government’s reckless spending, because these budget changes mean that people will drop out of private health cover and join the queues of people waiting for treatment in public hospitals, while those who keep insurance will have to pay more.

The opposition will oppose the changes to the private health insurance rebate. We propose that the government should retain the rebate in its current form and instead seek to realise equivalent savings by increasing the excise on tobacco products by 12.5 per cent, as announced by the Leader of the Opposition. The President of the Australian Medical Association, Dr Rosanna Capolingua, said that doctors were deeply concerned for the one million Australians expected to lose their job over the next few years as a result of the recession. She said:

Unemployment has a huge impact on health. The physical and emotional health needs of these Australians, and of their dependents and families, were ignored in the Budget and this needs to be fixed. Increasing the tax on tobacco and using that money for essential health services will help. We aren’t happy about the Government’s broken promise on the 30% Private Health Insurance Rebate. The AMA is never happy about money being taken out of health. This means strengthening our struggling public hospitals in preparation for longer queues.

The CEO of the Australian Private Hospital’s Association, Michael Roff, said:

Mr Turnbull’s statements on the rebates are a win-win for the health system. Under the Opposition’s plan, self reliance continues to be rewarded, choice is maintained and a balanced public/private healthcare is preserved. As the Australian population ages, the government needs to ensure there is a sustainable health system for everyone. They should be encouraging more people to meet their own health care costs and not to introduce impediments to them doing so. The changes to the system proposed by the Government are complex and confusing and discourage people from taking up private health insurance. By increasing the tobacco excise, there is no net cost to the Budget, and no one who is seriously concerned about the health of Australians and sustainability of our health system could oppose these measures. Tobacco is the leading cause of death in Australia and by increasing the excise on cigarettes, we could increase revenue and reduce pressure on hospitals in one foul swoop.

The budget also included an announcement that towards the end of 2009 the government will convert the status of Medibank Private from a not-for-profit health insurer to a for-profit health insurer, but will retain ownership in public hands. Medibank Private is Australia’s largest private health insurer, providing health insurance to around 3.2 million Australians. The government’s stated intentions are to improve the competitive neutrality between Medibank Private and its for-profit competitors by making Medibank Private liable to pay company tax and dividends, which will help drive future efficiency gains. As the payment of company tax and dividends is expected to be made to the Australian government, some have suggested that its change in status will make it a cash cow for the government. Although listed as a revenue measure in the budget papers, the government has not released estimates of the savings expected from the measures due to commercial sensitivities.

This measure has attracted much less commentary than the changes to the private health insurance rebate, but some pertinent issues have been raised. Some have pointed to the debate that ensued when the former Howard government announced its intention to sell Medibank Private. At that time, questions were raised over the right to ownership of Medibank Private’s assets. Although the budget measure does not propose proceeding to a sale of Medibank Private, debate over the ownership of assets and rights of policy holders may yet emerge. Further, it has been argued that changing the status of Medibank Private from not-for-profit to for-profit may not be straightforward and may be more complex than simply changing its constitution to allow for this.

The government has also announced that it intends to make legislative changes that would allow health insurers to spend surplus capital to fund the provision of sporting and recreational activities and community based health promotion activities. Under current arrangements, the assets of not-for-profit health insurers can only be used to meet liabilities, such as the payment of benefits for complying health insurance products or other expenses, or to make certain investments. Health insurers that operate on a for-profit basis do not have the same restrictions on their surplus capital. Notwithstanding prudential solvency requirements, they are free to allocate their profits where they choose.

There are discrepancies appearing regarding the financial implications of the introduction of this bill. As I have already alluded to, the opposition’s proposal has a no net cost effect on the budget. The estimates provided in the explanatory notes to this bill differ from the estimates provided in the budget. The budget estimates show lower savings, $580.2 million and $605.8 million for the forward years 2011-12 and 2012-13 respectively. The explanatory memorandum estimates savings of $650.2 million and $680.8 million respectively, a discrepancy of some $150 million.

Labor’s rebate means test is bad—an idealogically driven policy dressed up as Robin Hood politics. It breaks a rolled gold written and personally signed promise that Kevin Rudd made just prior to the 2007 election. The changes to the private health insurance rebates are just the latest phase in Labor’s unrelenting war against private health insurance. Labor hates private health insurance. The coalition introduced an open-ended private health insurance rebate because for every rebated dollar, a privately insured person contributes more to our health system as a whole. The coalition believes in the right of all Australians to take charge of their own health needs and plan for the future. We have always worked to deliver incentives to promote the uptake of private health insurance and take the pressures off Medicare.

The introduction of the measures proposed in these bills will ultimately cause people to drop out of private health funds because they will no longer be able to afford the much higher premium increases, and that will restart the catastrophic premium membership death spiral of the 1980s and 1990s, when Labor almost wiped out the private health system. I condemn the government for its idealistic attack on private health insurance and I damn them for what they are doing to our great country.

I take the opportunity to put on record in the House quotes from the government over a period of time:

The clash between public and private in the health sector is an old one that has had its day. More importantly, Labor is committed to making sure both our public and private systems can work together for the benefit of the community, and that they are of world class standard.

That was Nicola Roxon, shadow minister for health, 7 April 2007.

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians. … The Liberals continue to try to scare people into thinking Labor will take away the rebates. This is absolutely untrue.

That was Nicola Roxon, shadow minister for health in a media release on 26 September 2007.

The private health insurance rebate remains unchanged and will remain unchanged.

That was Kevin Rudd in the Australian on 25 February 2008.

We continue to support the 30 per cent, 35 per cent and 40 per cent rebate for those Australians who choose to take out private health insurance.

That was Nicola Roxon, Minister for Health and Ageing on Macquarie Radio Network on 18 May 2008.

Private health insurance consumers will still be able to claim the 30 to 40 per cent rebate, and the lifetime health cover incentives will remain in place.

That was Nicola Roxon, Minister for Health and Ageing in a speech to the Australian Health Insurance Association annual conference on 8 October 2008.

‘The government is firmly committed to retaining the existing private health insurance rebates,’ Ms Roxon told the Age.

Reported in the Age on 24 February 2009. They are classic examples of the spin the Australian people have been brainwashed into believing. Hopefully, the Australian public are starting to wake up to this glib Prime Minister, who has no care or concern about what he is doing to future generations of Australians nor, more importantly, for what he is doing to the health system in this country. He stands condemned for it and I hope the Australian people at the next federal election send a very strong message to both the current Prime Minister and the Australian Labor Party that we will not tolerate your ideological nonsense and we will not tolerate you sending this country down the drain of economic disaster. I thank you for the opportunity to speak in this debate tonight.

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