Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Hansard source

In rising to address the private health insurance legislation, I think it is important to look at the context in which the government is trying to reimpose a tax obligation upon people who have taken out private health insurance. It is important to have an understanding of the way private health insurance works in order to understand just how unfair this government's move to penalise people who have taken out private health insurance is—and that means all people.

Firstly, we have a universal healthcare system called Medicare. It is universal. It has no means testing. It is simply available to all. Medicare cannot function at all unless it has a strong private health component. That means that it needs a large number of Australians to be covered by private health insurance and to use the private hospital system with that insurance in order for pressure to be taken off the public system and for the public system to have a chance of serving the needs of those who do not carry private health insurance.

Private health insurance itself is not truly insurance in that it does not take into account risk factors. It is community rated, which means that everybody pays the same premium, irrespective of their state of health, their age or other things that may be relevant to risk insurance. Community rating works because those people who take out private health insurance whilst they are young do not use it as much as those people who take it out when they are older and who use it more as they age. When the younger cohort ages it is replaced by a new younger cohort and so on, so that the system works. When you start to impose distortions on the system, those so-called healthier people who are non-users of the system drop-out, which means that the system becomes less workable to the extent that the burden is being borne by the fewer number of those contributing and while those who remain in the fund are those who utilise it more.

When we took office in 1996 the coalition realised that Labor had so downgraded private health insurance, particularly former health minister Carmen Lawrence who refused to take it out herself and who relied on self-insuring and on the tax deduction she could get, and had so badly treated private health insurance that the percentage of people covered by it was plummeting. It was worked out that if less than 22 per cent of the population was covered it would collapse. We in the coalition knew that we had to increase the number of people being covered by private health insurance. Therefore, it was necessary to make it more attractive. There are two ways of doing that: either by tax deductibility or by offering a tax rebate. It is a taxation measure. The coalition government decided that it would provide a rebate of 30 per cent for premiums paid to enter private health insurance. The rebate increased when people reach the ages of 60 and 75 to make it more attractive and more affordable for those people to remain in private health insurance.

There are now 10.3 million people covered by private health insurance, and last year forty per cent of operations and 2.5 million procedures were carried out in private hospitals. It is an important—indeed, vital—service for certain country areas. If members look at the statistics they will see that a member in a metropolitan area is likely to have 60 per cent of their electorate covered by private health insurance, that in a regional area there is more likely to be around 40 to 45 per cent coverage and that in a truly rural area there will be about 35 per cent coverage. It is private health insurance that enables regional and rural areas to have a private hospital, which then attracts specialists to their areas. If patronage drops off and the private hospital disappears, so to do the specialists in those areas. That is what is likely to happen with this pernicious legislation.

When asked about the rebate before the 2007 election, the promise was made that 'not one bit, not one iota' would Labor touch the Private Health Insurance Rebate. Yet one of the very first things it did in an early budget was to put in an item to impose means testing. That was defeated because there were Independents in the Senate who saw how unfair, pernicious and bad the policy was. The government tried it again, and once again it was defeated by the same Independents in the Senate. Now this legislation is back before the House. It remains the same pernicious, unfair and bad policy that it always was.

Several people have done some serious research into the impact of this legislation. Booz and Co. published a report dated 9 February 2012 in which it challenges Treasury's figures. The Minister for Health and Ageing, Ms Plibersek, has said that if this means testing comes in—this pernicious move—the government will save $100 billion over the next 40 years. Booz and Co. has taken a good look at just where the rebate fits into the total cost of providing health care. It highlights that the rebate has remained at a constant 3.5 per cent of total public and private health expenditure over the last decade and that that is a small component of the healthcare spend. It has increased by only 0.2 per cent over the last 10 years. Booz and Co. said that nobody should rely on the government's modelling and that there are not the savings to be found in this measure that the government claims. None of that would surprise us, because some of the modelling that Treasury does these days shows that it is a highly politicised department.

Deloitte did some very serious work on it last year. It found that consumers who withdraw from private health insurance are less likely to have claimed healthcare benefits than those people who stay in. It says that over five years 1.6 million consumers will withdraw from private hospital cover and 4.3 million will downgrade. Downgrading is very important. Because the surcharge that is applied to the Medicare levy is to be increased, downgrading will become an important option. It means that less will be paid by people who are not users of the system at the present time rather than by users who are. Again, you get this distortion. As I said, this is a tax issue. It is a tax rebate that is received by people who can elect to notify their healthcare provider and the tax office that they wish the 30 per cent to be deducted at the front end, rather than waiting for it to be refunded when they submit their tax return. There may be people, I suppose, who have paid in advance, who may be asked to make a refund of their rebate; but that remains to be seen. Deloitte also point out that by 2016 premiums will be at least 10 per cent higher than they would have been from any normal increase in premiums over that period. So whatever the normal premium increases will be, there will be a 10 per cent impost on top of that.

ANOP did some very good research last year as well. They found that the importance of the rebate is tremendously well known to people. Something like 95 per cent of all people are aware of it and of their entitlements and a lower figure—somewhere around the low 60s—are aware of the penalty that is payable by way of the Medicare surcharge if they do not take out private health insurance when they are obliged to do so. So it is a very important issue. ANOP found that 13 per cent of people would drop hospital cover entirely and an additional 33 per cent would downgrade. So when we are discussing the impact of this legislation, we are in fact pointing out that we are going to penalise those people who can least afford it.

Minister Plibersek is pretty rich. There are a couple of good salaries coming into that family. She will not feel it. If she chooses to drop private health insurance, it will not matter much to her. But if she is in it and she is one who drops out, that will impact all the way down the chain. The fewer people paying premiums, the more premiums will rise. This will impact people on fixed incomes, which certainly includes Australian seniors. It includes pensioners. It includes superannuants. It includes part-superannuants and part-pensioners. It also includes people who value their private health insurance and who have an awareness of just how much they can afford to spend—which was another finding of ANOP. So when I call this legislation pernicious, I mean it. It is going to penalise the people who value private health insurance the most and who are very aware of how much they can afford. They are going to be pushed into a situation where they will be forced to withdraw from private health insurance and have to rely on the public sector.

The research has shown that between now and 2016 something like 845,000 new bed days will have to be found at a cost of $3.8 billion. As the state governments are responsible for the hospitals and provide over 50 per cent of the funding, they will bear the greatest burden of having to provide that funding—and that means infrastructure as well.

At every count, it is legislation which is ideologically driven. The Greens, the alliance partners of the Labor Party, certainly want to see private health insurance abolished. The Labor Party itself has a track history of wishing to see private health insurance downgraded, if not abolished. So we see an attack on and a misleading of the Australian people once again—on so many issues that it has become the Labor Party's natural way—that will see people who value their private health insurance penalised and greater stresses put on the public sector.

Mr Oakeshott, who once voted against this legislation and once voted for it, has more people over the age of 60 in his electorate than in any other electorate in the country: 29.1 per cent of his electorate is over the age of 60. These people need his support. They do not need him to penalise them. The Port Macquarie Private Hospital had 200 demonstrators outside it saying: 'Save our hospital. We need high private health insurance numbers to maintain the hospital and specialist care to that community.' If he will not listen to the sorts of arguments that we in the coalition are putting forward then perhaps he will listen to his own electors. They do not want this legislation passed. They want private health insurance to remain universal in character.

I repeat my opening remarks: Medicare is universal in nature. It needs the universality of the private sector in order for it to survive. They are mutually bound to one another. To attack the private sector is to attack the public sector, because it will put the waiting lists way out for people who are using the public sector. This legislation will be for no good purpose except to try and meet the government's ideological aims, which is to see the end of private health insurance.

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