Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Hansard source

I speak in relation to this particular legislation, the Health Insurance Amendment (Extended Medicare Safety Net) Bill 2014. When the member for Sydney was the minister for health and I was parliamentary secretary for health and ageing in the 2013-14 budget, we increased to $2,000 the general threshold of the extended Medicare safety net from 1 January 2015. The concession extended the Medicare safety net threshold and will be indexed as usual and will not be impacted by this particular legislation before the chamber.

In relation to this particular legislation, it has got to be remembered that the extended Medicare safety net was introduced to assist people with high out-of-pocket medical expenses. As the then President of the AMA Steve Hamilton said recently in a submission to the Senate Standing Committee on Community Affairs inquiry which was looking into this particular legislation:

The Extended Medicare Safety Net (EMSN) was introduced to protect individuals and families from high out-of-pocket expenses when their need for medical services outside the hospital setting was unusually high. The EMSN has helped many people access timely and affordable medical care, and is quite likely to have prevented downstream costs to the health system.

I noticed that National Seniors Australia, Michael O'Neill, in the submission to the same Senate Standing Committee on Community Affairs, said:

Research commissioned in 2012 by National Seniors Productive Ageing Centre revealed that 570,000 people age 55 years and over spend more than 10% of their income on health and about 250,000 spend over 20% of their income on health. Those with five or more chronic conditions spend $882 per quarter which is almost 6 times as much as those with no chronic conditions.

It is quite clear that Australians spend a considerable amount of out-of-pocket medical expenses each year. Often these costs are the difference between the fee charged by a medical provider for a service and the standard Medicare rebate received by a patient from Medicare. Medicare has historically subsidised a proportion of the Medicare benefit, MBS, fee for an out-of-hospital service with patients required to pay any higher amount the provider charges out of their own pockets.

Out-of-hospital costs are wide ranging. They include visits to GPs or specialists, services in private clinics and emergency departments, and a great many pathology and diagnostic imaging services. I note in that space, of course, the $7 co-payment that the current government is wanting to bring in in this budget with a saving of $3.5 million. That particular provision, it is estimated, will cost electors in my electorate of Blair about $6.4 million extra annually in terms of their medical needs. It will certainly have an adverse impact on my electorate and the health and medical costs issue for families and individuals in the electorate of Blair.

The Australian Institute of Health Welfare estimates that in 2011-12 out-of-pocket medical expenses were costing Australians $24.8 billion annually, or about $1,101 per person. Spending on medications account the lion's share of this $9.9 billion, followed by $4.7 billion on dental services and $2.9 billion on medical services. Out-of-pocket medical expenses are growing faster than any other health expenditure. The AIHW reported that between 2001-02 and 2011-12, these out-of-pocket expenses to individuals grew by 6.1 per cent in real terms compared with an average of 5.4 per cent for other expenditure.

The Extended Medicare Safety Net assists Australians to manage the often high costs of out-of-hospital medical services. Once spending on an out-of-hospital Medicare service exceeds the EMSN threshold in a calendar year, the Medicare rebate for these services increases to 80 per cent for the remainder of that calendar year. Subject to some capping, once the EMSN threshold is reached, eligible individuals and families get an 80 per cent discount, in effect, on their out-of-hospital Medicare expenses for the rest of the year. There are two levels. The concessional level assists Commonwealth concession card holders and family tax benefit part A recipients when their spending on out-of-hospital expenses reaches $624.10. Australians not eligible for the concessional rate must spend, currently, $1,248.70 before qualifying for the EMSN. That is called the general threshold.

Some background and history to this bill needs to be looked at. The EMSN was introduced in 2004, and its costs have increased. When the Howard government introduced the EMSN in 2004, it predicted it would cost $440 million in its first 3½ years of operation. In reality, it cost almost double that—$828 million—and this prompted the Howard government to increase the thresholds, both concessionally and generally, over the annual CPI increases. When Labor came into government, we took a consistent, reasonable and, I would suggest, equitable step to make the EMSN financially sustainable. We commissioned the Centre for Health Economics Research and Evaluation, based within the business facility at the University of Technology, Sydney, to review the EMSN, and they did a report confirming that out-of-pocket medical costs were actually growing quite significantly. While some Australians faced relatively low out-of-pocket medical costs, for others they were high and growing. The review reported that, despite the Howard government's increases to the thresholds in 2006, people in higher income areas were more likely to consult specialists and therefore:

We found that some 55 per cent of the ESMN benefits were concentrated to the top quintile of Australia's most socially advantaged areas, whereas the least advantaged quintile receive less than 3.5 per cent.

So the Howard government got it wrong in relation to this. The review expressed concern that, while the EMSN had increased affordability of high-cost medical services by the wealthier people in the community, it had had far less of an impact in lower socioeconomic areas. So it was concentrated in high income areas. Over 50 per cent of the funding went to obstetric and assisted reproductive services. Only eight per cent funded general practice consultations. The review found that, although the EMSN had made medical costs more affordable for cancer patients—and that is welcome, of course—the benefit was far less for those with complex needs such as diabetes. The review reported that the benefits had prompted some health providers to raise their fees, and this diluted the potential benefits to patients. The review found that the average provider's fee had risen by 4.2 per cent over inflation since the introduction and that the EMSN had accounted for 70 per cent of this increase.

We responded to that review by placing caps on the benefit available to the particular services identified by the review to account for over 50 per cent of the funding—obstetrics and reproductive services. We added further caps in 2010 to maintain consistency between the existing capped items or following a cost-benefit recommendation from the Medical Services Advisory Committee. In 2012-13 the Labor government extended the benefit caps to about 500 out-of-hospital services, including all consultations, including allied health, 38 procedural items and some surgical procedures. The new caps were calculated on the basis of the MBS fee and provided a maximum amount of benefit payable for a Medicare Benefits Schedule item, regardless of the actual fee charged by the doctor, specialist or other medical professional.

We received further advice from the Centre for Health Economics—an evaluation review in 2011. That review indicated that capping had put the EMSN on a more sustainable financial footing, fixing up the problem caused by the Howard government, who got it wrong back in 2006. The following year the Department of Health and Ageing reported the expenditure. It once again continued to increase following the introduction of capped arrangements, lifting eight per cent from $342 million in 2010 to $369 million in 2011. This was subscribed by DoHA to significant growth in aesthetic services and particularly in operations. We responded to that by maintaining the financial stability of the system.

In the 2013-14 budget, we took a pretty difficult—but we thought necessary—decision to increase the general EMSN threshold from $1,248.70 to $2,000. I commend the government for taking up Labor's budgetary item in 2013-14 and carrying this out. We maintained threshold concessions so that those who require them the most—pensioners and low-income families—will continue to benefit from them. We took a principled decision on the basis of equity in relation to this issue. I wish the current government had also looked at issues of equity and fairness in their current budget. That does not seem to have been a focus of their current budget, particularly in areas of health and ageing.

We means tested the private health insurance rebate also in relation to this space, and we reduced the rate paid to those on the highest income. That measure was forecast to save $2.78 billion over the forward estimates. I notice that some people opposite—including the member for Bowman who I might have heard talk about class warfare and all kinds of stuff when we did that—have not really altered what we were doing in relation to this space. They claim that the means testing of the private health insurance rebate would cause millions to drop out of private health insurance, but that was wrong of course. Over 120,000 people took out private health insurance in the six months following the introduction of means testing.

So we made some changes. We also did a number of things including the phasing out of the net medical expenses tax offset by 2019. In government we invested massively in health and ageing. We did the $4.6 billion dental reform package, we did some landmark reforms in terms of mental health and prevention—$2.2 billion—yet the current government seems to have adopted complete abdication of preventative health. They are getting rid of the Australian National Preventive Health Agency and cutting funding everywhere across the forward estimates in relation to preventative health programs in alcohol, drugs, tobacco et cetera.

This is a particularly important piece of legislation that we think was important as a budget measure. I commend the current government for doing it. It implements a policy decision of our government. It was a tough decision. It was a fair decision in order to maintain the financial sustainability of the health budget, and we on this side of the chamber are always the party of financial prudence.

Those opposite, in the last financial year, have increased the debt and deficit in this country. If you look at the Pre-Election Fiscal Outlook, there was $30.1 billion debt under us and under this mob it is $49.9 billion. They are the party of financial profligacy. We on this side made the hard decisions in health, private health insurance and the increase in the threshold that is here in this legislation. Those opposite always whinge and complain and carp, but the legislation before the chamber is an important but fair decision.

We protected those most at risk—low-economic status low-income families and pensioners—by the budget decision we made in 2013-14. The current government has picked up that point and I commend them for it. But they hit them hard at every turn in this deceitful and betraying budget, making health care more expensive and less accessible. Frankly, I think that is a shame, a tragedy and a disgrace. I commend them for this legislation but not for the broken promises on health cuts and taxes across the board.

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