Andrew Southcott (Boothby, Liberal Party, Shadow Parliamentary Secretary for Primary Healthcare) Share this | Hansard source

Labor's debt and waste have now led to the situation where we have a budget emergency. Instead of reining in the waste, instead of addressing the debt, Labor have used this opportunity to attack those who hold private health insurance. This is not the first time Labor have done that. Despite going to the 2007 election saying there would be no changes to the private health insurance rebate, there has not been a Labor government budget since then which has not attacked those who hold private health insurance. When Labor left office last time, the private health insurance industry was in a terrible state. Levels of insurance were about to fall below 30 per cent. The situation required a combined package of lifetime health cover, the Medicare levy surcharge and rebates to restore the levels of private health insurance to a sustainable level.

Lifetime health cover is a loading on private health insurance premiums for those who do not take out hospital cover before they turn 30. The loading rate is two per cent for every year that the individual is over 30 when they take out hospital cover. It has a cap of 70 per cent. It was introduced to address the situation whereby people would self-insure or people would make a judgement about whether they would need health insurance. You tended to have younger, fitter, healthier people not taking out health insurance and the insured population, as a result, being more likely to claim. That led to an unsustainable position.

Lifetime health cover was introduced by the Howard government. It came into effect on 1 July 2000. It is one part of those private health cover reforms that significantly increased private health insurance coverage. It was intended to ensure that people take out private health insurance at an early age and maintain their cover. The previous coalition government's changes to private health insurance reforms—the 30 per cent rebate, Medicare levy surcharge and lifetime health cover—saw coverage increase 75 per cent from 6.1 million to 10.7 million. The coalition has a strong track record in supporting private health insurance. We understand the very important role private health insurance play in taking pressure off the public system.

This bill enacts the changes which were announced in MYEFO 2012-13. The changes to lifetime health cover are due to take effect on 1 July 2013. Currently, the government pays the private health insurance rebate on the value of the total premium paid by the policyholder, including the lifetime health cover component. This bill will remove the private health insurance rebate on the lifetime health cover component. It will bank $386.3 million in savings on top of the $2.8 billion that Labor have already ripped out of private health insurance by means-testing the rebates from 1 July 2012. The changes to lifetime health cover in this bill will increase premiums by up to a reported 27½ per cent. This change will add extra complexity to the private health insurance system. This complexity is on top of the 12 different private health insurance premium pricing structures created by the means test.

These changes to lifetime health cover increase the red tape, increase the regulatory and administrative burden, for private health insurers. What is worse, once again, there is a very short time frame for insurers to implement these changes. The coalition does not support the changes to the treatment of lifetime health cover in this bill and will move amendments to oppose this aspect of the bill.

This is not the first time the government have broken their promises on private health. The Prime Minister and other ministers repeatedly ruled out any changes to the private health insurance rebates before they were elected. They did one thing before they were elected and did another thing once they were elected. As I said before, 10.6 million Australians have hospital cover. In my electorate, 76.3 per cent of voters are covered by private health insurance. The government's own Private Health Insurance Administration Council found that, in five years of the Labor, government exclusions and restrictions became much more prevalent. The increased use of exclusions may work against the policy objective of private health insurance easing the burden on public hospitals. The full effect of Labor's changes to private health insurance still has not been felt. PHIAC reports that there were $1.2 billion in prepayments as people tried to defer their premium increases. This has delayed the pain of Labor's cuts to private health insurance.

I would like to touch briefly on the second bill, which deals with the base premium. This bill has been rushed through the parliament without allowing the opposition enough time to consider it through normal processes. Those opposite have broken another convention of government. It was only introduced in the last sitting week, and it was then rushed through for debate today. They have listed this bill in cognate because they are trying to hide from the responsibility for their incompetent budgets. They are playing politics to shift the blame for their own terrible decisions. This government has turned a $20 billion surplus into five budget deficits. What we now have is a budget emergency. The opposition has problems with this bill but, in light of the budget emergency, we will not be opposing it.

I would like to say a little bit about the key role that private health insurance plays. Private health insurance is important for giving choice. In my electorate, as I said, three-quarters of voters hold private health insurance. Since this government has been in, at every opportunity they have made a tax on those people who hold private health insurance. We have said that we will restore the private health insurance rebate as soon as we responsibly can. Unlike those opposite, this commitment is part of our DNA. We think that the private sector plays a very important role. It is a very important part of the capacity of our hospital system. It is very important in the area of allied health—dental, physio, OT, speech therapy and optometry.

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