Louise Markus (Macquarie, Liberal Party) Share this | Hansard source

I rise to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 and the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013, presented together in this debate. Before examining the serious issues inherent in the provisions of the bills before the House today, it is important to reflect on the significant factors that have shaped the development of lifetime health cover loading to its current regulatory and legislative form.

LHC is a loading on private health insurance premiums that is applied at a rate of two per cent for every year that an individual is over the age of 30 when they take out hospital cover. A cap of 70 per cent is applied. LHC was an initiative of the Howard government as part of reforms, which came into effect in 2000, that significantly increased private health insurance coverage. It aimed to provide concessions to support hardworking Australians who chose to take out private health insurance for themselves and their families. The latest changes to private health insurance that this bill enacts were announced in MYEFO 2012-13 and the proposed changes to lifetime health cover are due to take effect on 1 July this year. These changes are in spite of many years of promises and undertakings made by the Prime Minister and Labor politicians that they want not to seek to change the private health insurance rebate provisions.

The real cost impact of the proposed and developed changes is significant. Through MYEFO and means-testing changes, Labor's broken promise on private health insurance amounts to nearly $4 billion: $386 million through changes to LHC contained in this bill, $700 million by limiting the government contribution to the rebate by a maximum of CPI as announced also in MYEFO and $2.8 billion for means testing. I am particularly concerned by the misrepresentative rhetoric that this government has employed whilst trying to both force through and justify the changes to the rebate system.

Labor is wrong to imply that private health insurance is for the wealthy. Some 10.6 million Australians have private insurance, whilst 5.6 million people with private health insurance have an annual household income of less than $50,000 and 3.4 million have an annual household income of less than $35,000. In the electorate of Macquarie close to 60 per cent of all residents have private health insurance. In large sections of both the Blue Mountains and the Hawkesbury regions household incomes are either at or below the national average. To claim therefore, as this government is attempting to, that private health insurance is for the rich or wealthy is totally absurd.

I am also at a loss to understand why the Prime Minister and her colleagues think it is at all advisable or even morally defensible to place even greater pressure on families who are choosing to ease the pressure on public hospitals and provide choice in health for their families, to place additional pressure on those who are already struggling to cover the basic costs of living. The government's changes to private health insurance are already having a negative impact. The government's own Private Health Insurance Administration Council, the PHIAC, has found in the five years to 2012 that 'exclusions and restrictions have become much more prevalent' and that the increased use of exclusions 'may work against the policy objective of private health insurance in easing the burden on public hospitals'.

The private health insurance cuts will put more pressure on public hospitals, which are already struggling under the $1.6 billion cut to hospital funding in Labor's MYEFO. This includes retrospective cuts to public hospital funding that has already been spent and allocated in 2011-12 and 2012-13. It has caused the closure of some public hospital beds, operating theatres and delays to elective surgery. It seems extraordinary, therefore, that this government can seek to argue that, by making private health insurance less affordable, public hospitals will be able to provide a better service. This assertion again is simply absurd.

The full impact of Labor's means-testing changes are yet to be felt. The PHIAC reported $1.2 billion in repayments in the June quarter as people tried to defer the resulting premium increases. Many policyholders prepaid for 12 months or more, delaying the pain of Labor's cuts. Federal Labor has spent approximately $1 billion establishing nearly 12 new bureaucracies which appear immune to cuts while funding has been slashed for private health insurance, public hospitals and dental health.

The changes to Lifetime Health Cover in this bill will increase premiums by up to a reported 27.5 per cent on 1 July this year. This will directly affect lower income Australians. Presently the LHC loading is removed after 10 continuous years of hospital cover. Once again, the government is changing the rules of the game for ordinary Australians. There will be people who are close to having their loading removed, having paid their loading in good faith and abided by the appropriate rules and regulations. Now they will be slugged with a 27 per cent increase in premiums and forced to receive the impact.

The means-testing changes already created around 12 different pricing structures for premiums, further complicating a system that many Australians find very difficult to navigate. Changes to LHC will further increase the administrative burden on private health insurers, with short time frames to change systems by 1 July this year. The changes proposed by this government can only be counter-productive and will discourage many battlers from taking out and maintaining private health insurance. The previous coalition government's private health insurance reform in the form of rebates, Medicare levy surcharge and lifetime health cover saw the number of people with private health insurance increase 75 per cent from 6.1 million people to over 10.7 million people.

The Private Health Insurance Legislation Amendment (Base Premium) Bill 2013 covers the base premium. It is clear that these measures have been introduced because of the disastrous fiscal situation of this current government. My concluding points must necessarily refer to the irregular pattern during the tenure of the current Labor government, namely the manner in which the current Prime Minister has sought to rush this legislation through the House. The coalition believes that the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 is not in the best interest of the Australian people.

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