Ms Catherine King (Ballarat, Australian Labor Party, Shadow Minister for Health) Share this | Hansard source

It is a pleasure to continue in this debate on the Private Health Insurance Amendment Bill (No. 2) 2014. As I was saying when I was last speaking, it is abundantly clear that a single organisation trying to cover all of the bases with fewer resources cannot be as effective a voice as an organisation solely dedicated to looking after the rights of health insurance fund members, because, quite unlike this government, the Private Health Insurance Ombudsman exists to protect the interests of Australia's private health insurance consumers.

Specifically, the Private Health Insurance Ombudsman assists health fund members to resolve disputes through an independent complaints-handling mechanism; identifies underlying problems in the practices of private health funds, or health care providers, in relation to the administration of private health insurance; provides advice to government and industry about issues affecting consumers in relation to private health insurance; and provides advice and recommendations to government and industry about private health insurance, specifically the performance of the sector and the nature of complaints. It is not as if the services of the Private Health Insurance Ombudsman have not been in demand, or that they have been ineffective or unable to deliver for consumers. With only 12 full-time-equivalent staff, the Private Health Insurance Ombudsman has handled 3,427 complaints in the 2013-14 year. That is around 65 complaints every week and it is growing. This represents a significant 16 per cent increase on the previous year, up from 2,955. Complaints made, no doubt, in part because of the former minister's decision to wave through the biggest average premium increase in a decade. One can only wonder how many more complaints will be generated by his successor, matching that with the near identical decade-high increase last month. I will come back to that shortly.

The increase in overall complaint numbers flowed through into the number of higher level or serious complaints requiring investigation by the Ombudsman. In 2013-14 the Ombudsman received 580 higher-level complaints, which represented a 28 per cent increase on the 450 received in the previous year. The Private Health Insurance Ombudsman also reported a 45 per cent increase on a number of unique visits to privatehealth.gov.au, a resource consumers can use to compare policies and obtain information about private health insurance products. Despite the strong growth in traffic to the web site and strong growth in complaints, the dedicated Private Health Insurance Ombudsman was able to report an increase in the level of consumer satisfaction, with 85 per cent of those surveyed reporting that they were satisfied or very satisfied with the service they received after making a complaint.

It does raise the question, therefore, as to why the government wants to merge the Private Health Insurance Ombudsman with the Commonwealth Ombudsman. It is also worth looking at the type of complaints the Private Health Insurance Ombudsman actually investigates. The annual report reveals that in 2013-14 the issues causing higher numbers of complaints to the Private Health Insurance Ombudsman were oral information, hospital exclusions and restrictions, the pre-existing condition waiting period, cancellation and general service issues.

To look at one of those areas in detail, complaints about hospital exclusions and restrictions came from members who discovered that their treatment was only partially covered, or excluded under their policy. In some cases this was after their health insurer had added new restrictions or exclusions to existing policies. I stress again that we make no criticism of the Commonwealth Ombudsman. But just to highlight this one issue, hospital exclusions and restrictions is a pretty specialised area. It is hard to see how an office that is not dedicated specifically to private health insurance could handle issues like this in such an efficient fashion. Then again, of course, that may well be the whole point of this exercise, because, as we have seen repeatedly since the election, the government is not interested in being scrutinised on these issues. As it has shown again with health cuts across the portfolio and GP tax versions 1, 2, 3 and now 4, this government has repeatedly proven itself to be completely incapable—if not outwardly opposed—to standing up for patients when it comes to health care.

Of course, nowhere has this been more apparent than in this government's handling of the two private health insurance premium rises that have occurred on its watch. We saw this especially with the Minister for Health's announcement late on the afternoon of 27 February that the government would wave through the second-highest increase in private health insurance premiums in a decade. 'Taking out the trash' is how journalists refer to announcements like this, late on a Friday afternoon, as governments try to bury the bad news. Not only was this late on a Friday, it was about the last possible time the minister could make this announcement and still allow health funds the one-month notice they are required to give their members—a month's notice of premium rises. It is fair to say, then, that this was not an announcement that was ever likely to be accompanied by a large number of flags and a television camera.

As I mentioned, this was the second-highest increase in a decade—'second-highest' because that average rise of 6.18 per cent was beaten, by the barest margin, by the 6.2 per cent rise announced by her predecessor just weeks after his election. Whereas the current minister tried to hide her announcement with a Friday afternoon drop, her predecessor tried an entirely different tactic, rushing out his announcement of the biggest rise in a decade months ahead of schedule, just three days before Christmas.

So, 18 months in power and two private health insurance premium rises—both the biggest in a decade, both bigger than any announced under Labor, both around triple the inflation rate and both the biggest since the Minister for Health was the current Prime Minister. So, the current and former ministers can still argue that there was at least one former minister with a worse record when it comes to them and that, of course, is the member for Warringah, the Prime Minister, who routinely approved increases exceeding seven per cent.

When family budgets are under such pressure, when unemployment is rising and when people are watching every single dollar, it is crucial that the government do everything possible to keep private health insurance costs down. That means not just waving through every premium rise that comes across your desk; it means, as happened under Labor, ensuring that every cent of these rises can be justified.

In government, Labor did moderate these increases in the interests of consumers and because we do care about the cost-of-living pressures on Australians—just as we care about the rising out-of-pocket costs that occur in health care. By contrast, both of these rises approved since the coalition returned to power exceeded any of the six annual increases approved under the Australian Labor Party. And this did not occur by accident. In the 2012-13 budget, as a government Labor provided an additional $1.4 million over four years to increase the Private Health Insurance Ombudsman's capacity to manage complaints and to respond to consumer inquiries. In fact, in that budget Labor also provided $2.3 million over four years to the Private Health Insurance Administration Council in order to establish the Private Health Insurance Premiums and Competition Unit. This unit improved the advice provided to government on private health insurance industry pricing, industry cost drivers and insurance premiums. It is a very important mechanism for government to be able to seek advice from and to ensure that it is able to go back to private health insurance companies to say, 'We don't think this rise is justified,' and to ask them to justify that increase on every product.

Unfortunately, we have had the current Prime Minister say that his view in terms of private health insurance premiums is that they should be left entirely up to the market, clearly signalling that the government intends to withdraw from this space entirely. Again, we see this bill and the context of the bill in the context of those comments.

So, frankly, Labor's record, when it comes to standing up for private health insurance consumers every year, is very clear, and it is very different to the government's record from its 18 months in office. The government always likes to talk competition but, unfortunately, it is not delivering in this space. Labor, by contrast, not only backed a competitive private health insurance sector we backed those words with action, and we gave the ombudsman the tools to deliver for consumers. That was proven by the big increase in the number of people using the ombudsman's website to help them get the best information about their health insurance and, where necessary, to get the ombudsman to use its specialist knowledge to act for them when they believed the fund had fallen short of their expectations and their clear understanding.

So, Labor stands for private health insurance members having access to the best information and the best resources to get the best possible outcome from their health insurance at the lowest possible price—just as we stand, always, for patients having access to the best-quality and most efficient health system in the world.

Which is why this government's attack on Australia's health system is as pervasive as it is troubling. Private or public, it makes no difference; the government wants you, as a consumer, to pay more and to get less—high premiums, up-front payments, longer hospitals queues and more expensive medicines. It does not matter what area of health, the government's diagnosis is always the same: you should pay more.

It is also worth looking briefly at the profile of the private health insurance industry. The former Minister for Health, of course, predicted catastrophic consequences when Labor made the decision to means test the private health insurance rebate. And—we have this on record—it still remains the now-government's policy to abolish that private health insurance means test. I look forward to the government bringing that legislation forward. This was, of course, a very prudent budget measure which has resulted in substantial savings to the budget that have been able to be reinvested in health.

The government, or the opposition as they were then—prone to exaggeration and utterly incapable of working in a bipartisan manner—said that means testing the private health insurance rebate would see droves of people abandon their cover. Well, in fact, quite the opposite has been true. Indeed, over recent years we have seen the number of Australians with some private health insurance actually increase. In June 2008 more than 9.5 million people, or 44.9 per cent of the population, had some form of hospital treatment cover. In June 2014 this had risen to more than 11 million people, or 47.2 per cent of the population. And when it comes to general treatment, in June 2008 more than 10.6 million people had private health insurance, representing 50.1 per cent of the population, and in June 2014, 55.3 per cent of the population, or more than 12.9 million Australians, had some form of general treatment cover.

In fact, what we have also seen is an increase in the number of people using the privatehealth.gov website, which has been an important thing for people to do—for people to become much more aware of the type of cover they have and to take the opportunity to ensure they are getting the best cover to meet their needs at their particular time in life and review their cover more regularly. I encourage people to look at the privatehealth.gov website, which provides all of the information for all of the products right the way across the sector, as opposed to some of the more commercial products that only provide information for those products and those funds that provide a fee to participate in that commercial service. It is a very important government service and one that I hope is continued to be supported and expanded where possible, or where it needs to be, by this government.

Labor believes in a competitive private health insurance industry, which is why we opposed the government's decision to sell off Medibank Private; the proceeds of which are not going back into health—a huge missed opportunity—but back into infrastructure, but not infrastructure across the country. It is infrastructure in a particular area in the community—well deserved, I am sure, and well needed. But, given that it is the government's decision to sell Medibank Private, it does seem to have been an opportunity that perhaps the health sector will tell them they have missed.

We know one of the real winners from the sale of Medibank was Australia's spin doctors, with the government having awarded a $2,000 a day contract to sell the sale of Medibank in January 2014. Despite this, the government was not able to explain how the sale of Medibank Private would increase competition in the sector, be in the best interests of health consumers or actually keep downward pressure on premiums. In fact, the opposite has been the case. If this move was going to increase competition, it certainly has not been demonstrated through the second highest private health insurance premiums in the past decade—something waved through by the Minister for Health earlier this month and announced late on a Friday afternoon.

As to some of the substantive elements of the bill, the opposition—as you would indicate from this speech—does have some reservations about the merger between the Private Health Insurance Ombudsman and the Commonwealth Ombudsman. We are worried that it will diminish the capacity of the Commonwealth Ombudsman in terms of where its resourcing is at the moment. Again, I reiterate that it is a very important and excellent organisation, but it is one that is about to take on a very significant and important role in relation to metadata and we are concerned about its capacity to fulfil the work that it has. We are also concerned about the capacity of an organisation to specialise in this area of private health insurance.

Specifically, we are concerned that at present the subject of a complaint may request additional time to report to the Private Health Insurance Ombudsman. This ability is not being transferred ostensibly to provide consistency with the Commonwealth Ombudsman's existing powers, and we are concerned about that. I will be moving some second reading amendments shortly to that affect. We will not be—I will relieve some pressure off the minister's staff members here—opposing the bill in this House outright. We will, however, be moving some second reading amendments that seek to reinstate the powers that the current Private Health Insurance Ombudsman has that are not being transferred to the Commonwealth Ombudsman. We want a very clear explanation, when the minister comes into the House to sum up this bill, as to why they have not been included—and I will detail each one of those. We have also asked that this bill be referred for committee inquiry in the Senate. We will be asking for that to occur, because we think it is really important that there is proper scrutiny of this bill in relation to those powers. We will be reserving our position in the Senate, in relation to the voting on the bill, depending on what that inquiry comes up with.

As to those measures, as I said, one of the measures that is not in there is the capacity for the subject of a complaint to request additional time to report to the insurance ombudsman and that is not being transferred. Similarly, there is a current provision for the minister to intervene where the Private Health Insurance Ombudsman decides not to investigate a complaint. There is the capacity for the minister to intervene and say, 'I actually think this complaint does need to be investigated.' I think that is important. As shadow health minister, I get emails on a weekly basis—as I am sure is the case for many members in this place—from people who have a complaint about their experience of private health insurance. The capacity for a minister to be able to respond to those inquiries from backbenchers to say, 'Actually, I think this probably is worthy of further investigation'—to have that power to be able to say that—has been removed in the transfer from the Private Health Insurance Ombudsman over to the Commonwealth Ombudsman. Again, I think that is an important component to have, and it is unfortunate that has not reached its way into this bill.

Also omitted is the provision for the minister to request the Private Health Insurance Ombudsman to undertake an investigation. Again, that is not being transferred over. I am making an assumption that that has happened because that is not currently within the existing powers under the Commonwealth Ombudsman. But with this specific area, private health insurance, it is a measure that is important.

Likewise, at present, the Private Health Insurance Ombudsman is not able to request information about the complainant's dealings with the subject of a complaint without the complainant's consent. This also applies when undertaking an own-motion investigation. These limits on information-gathering powers are not retained by the move. Whilst the Commonwealth Ombudsman will retain the Private Health Insurance Ombudsman's power to undertake voluntary or compulsory mediation, the penalty for failing to participate in that mediation will be reduced from 30 penalty units to 10 penalty units. Whilst that might be welcomed by some in the sector, the incentive that the penalty units power has is not explained by that change. The penalty for failing or for refusing to provide information to the Private Health Insurance Ombudsman is a maximum of 30 penalty units and is a strict liability offence. The bill proposes to rely on section 36 of the Ombudsman Act, with a maximum penalty of $1,000 and/or three months imprisonment. Section 36 is not an offence of strict liability, although the evidentiary burden will be upon the defendant to prove that they had a reasonable excuse for failing to comply. Again, in terms of the powers currently utilised by the Private Health Insurance Ombudsman, we think there needs to be further investigation of the decision to not move that over.

So, whilst not opposing the Bill outright in this chamber—and again I stress 'in this chamber'—I do want to flag the opposition's concerns about these omissions as well as, more significantly, the opposition's concerns that the capacity of the Private Health Insurance Ombudsman to pursue complaints; provide advice to government and industry about issues affecting consumers in relation to private health insurance; and provide advice and recommendations to government and industry about private health insurance—specifically the performance of the sector and the nature of complaints—will be diminished.

With this in mind I can express the opposition's intention that this bill should be referred outside of this chamber for inquiry so that these issues can be investigated at some depth to inform the debate about this proposal.

We do not think the government has made the case for these changes either in announcing the proposed merger or subsequently, and the opposition therefore is right to hold these concerns. Again this appears as though it has been a line coming out of the Commission of Audit or the budget about something that looks like a good idea without proper and thorough investigation and explanation of why it is actually occurring.

And it is especially, obviously, the case when taking into consideration the context in which this decision is being taken: more than $5.9 billion in cuts already realised in the health portfolio and billions of dollars still to be considered.

The government of course still intends to pursue its freeze on the indexation of Medicare benefits services, effectively cutting the income of general practice by $1.3 billion. The government obviously still has on the table. It is increasing by $1.3 billion the cost of medicines—a measure that includes significant changes to the Pharmaceutical Benefits Scheme safety net too. The government not only intends to merge the Private Health Insurance Ombudsman with the Commonwealth Ombudsman but also wants to cease the Private Health Insurance Administration Council as a separate body, instead planning to merge it into the Australian Competition and Consumer Commission and the merger of health fund prudential regulation functions to the Australian Prudential Regulation Authority.

Private health insurance is a very specialised area. I know from having worked with the people in the department in that space before how specialised that particular area is, and frankly it would be a damning indictment on the government if we were to lose that area of specialty and the level of scrutiny that is on a product that several million Australians rely on.

Again, in our view the government has not made the case for change. It may well be that the opposition can support these changes, but such is the dysfunction of the government in the way it conducts itself that it does not consulted the sector over this. It genuinely has not. The sector has been in to see me about it. It came as a bit of a surprise to them. They are not sure about some of the details of it. It did not consult the crossbench—I have certainly talked to them as well—and it certainly did not consult the opposition. I do acknowledge a briefing was offered, but we had already well and truly formulated our position by then.

So I do think it is important that there be some proper scrutiny on the bill. We will reserve our position in relation to that for the other chamber once that scrutiny has occurred, but I particularly want the government to explain very clearly why it is of the view that those important measures are not in there. I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading the House calls on the government to reinstate the:

(1) provision for the subject of a complaint to ask the Ombudsman for additional time to respond to a complaint;

(2)provision for the Minister for Health to intervene where the Ombudsman decides not to investigate a complaint;

(3) provision enabling the Minister for Health to request the Ombudsman to undertake investigations;

(4)capacity of the Ombudsman to investigate complaints, produce high quality reports, and protect the rights of private health insurance consumers; and

(5) penalty for failing to participate in mediation."

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