David Gillespie (Lyne, National Party) Share this | Hansard source

I rise in support of the Private Health Insurance Amendment (Income Thresholds) Bill 2021. In Australia we have a very hybrid system of health delivery. We have a large public health system through state-run public hospitals. We have the Medicare system, where people get a payment which can be up to zero dollars if they are bulk billed or where they get the cost of their medical care as an outpatient to general practitioners and specialists subsidised by the Medicare system. Then we have another arm, which is the Pharmaceutical Benefits Scheme, which is the envy of many First, Second and Third World countries, where the government subsidises the cost of drugs that are approved to go on the Pharmaceutical Benefits Scheme which are proven to be effective and cost-effective and to deliver a quality-adjusted life-year benefit to the recipients. It's a very high threshold, but the scheme is respected around the world, because in Australia we get the benefits of some amazing, cutting-edge drugs that cost people in other countries—in North and South America, Europe and Asia—hundreds of thousands of dollars.

Part of the success of the hybrid system that we've got is the private health insurance rebate, which keeps a lot more people engaged in private health insurance who are young or who have fixed low income—perhaps income support from the government through the age pension—and would otherwise struggle to maintain private health insurance. But the whole system relies on a certain number of people taking up private health insurance. The analogy I always make is with car insurance. If the only people who held car insurance were ultrawealthy people or people who are likely to have a car crash, you can imagine that car insurance wouldn't work very well. We have compulsory third party. We have lots of competition. Pretty much anyone with a car has got a minimum level of insurance. That's why it's important in our hybrid system to keep the private health insurance system affordable and viable. We have done a lot of reforms to make sure that is the case. One of them is the rebate system. It is a tiered system based on declarable income, and it is working. The indexation of it went into a freeze sometime ago, but this bill enables that freeze of the rebate levels and the thresholds to remain the same.

As well as that, people should realise that we have done so much to reform private health insurance. We have introduced simplified clustering of products, into gold, silver and bronze, so that people can make headway in deciding what level they will choose. We have had reforms around the Prostheses List, which was good in intent but was being disruptive and counterproductive because some entities were charging the full cost for prostheses yet receiving them at a much lower price. There was quite a large price differential between the public hospital prices for prostheses and the private hospital prices. We've done lots to increase affordability of private health insurance and the involvement of young people in private health insurance, by extending the time that young people can remain within their family's cover. Historically you could remain within that cover until you were no longer dependent, but now you can remain within it until just over the age of 30. To cover for mental health, for young people there is a 10 per cent discount for private health insurance.

We've done other things to reform the health system that people are probably now realising the true benefit of in the COVID world—it has changed everything. Telemedicine has been reformed and is now part of regular practice. It has developed efficiencies for both patients and the health system. In the Pharmaceutical Benefits Scheme a reform went through—not in this last budget but in the budget before—which was an extra appropriation so that there is leeway to get more new drugs onto the PBS. Old drugs drop in price because they've been around for a long time and their patent has expired, and there are competitor drugs. This reform has allowed it to be a much quicker process to get new drugs onto the Pharmaceutical Benefits Scheme.

But, if we didn't have the private health system, which is underpinned by private health insurance, our public hospital system would be overwhelmed. Everyone knows about waiting lists. In my electorate, in the last figures I saw a couple of years ago, 48 per cent of people in my electorate, the wonderful Lyne electorate, had private health insurance of some type. I have the oldest demographic in the country, I might add, and we know a lot of the health activity and economic costs are tail-ended. It's in your senior years where most of the big costs in your health expenditure as an individual and your family happen. There's a big bit at the beginning when you're first born, with obstetric cover, but then when you get into the replacement things like hips, knees, joints, cardiac surgery, cancer treatment, it's all weighted to the end. If we didn't have those people covered by health insurance, that would all be bundled onto the public health and hospital system. It is a hybrid system. Our waiting lists that are way too long in many public hospital systems would be much longer if it wasn't for the ability of people to take control of their own health and take out private health insurance.

The amendments continue to secure the future of private health insurance. We incentivise people with high incomes, who can afford it, to take out private health insurance; otherwise, there is a Medicare levy surcharge to be paid. It's a bit of carrot and stick. Like I said, private health insurance must remain viable and that's why the prostheses list changes and reforms are in place. That's why we have young people staying in through their family cover. When I started my early post-university and employment career, private health insurance was more affordable. Everything was more affordable a long time ago, but these days people are trying to get rid of their HECS debt, pay their taxes, pay their high rents, which are incredible in the city. It's really quite scary the amount of money that young people now pay for rent in metropolitan cities. All of those things mean that often the first thing that falls off a young person's budget, because it's so far in the distance, is private health insurance; a lot of young people are dropping out of it. I have a lot of pensioners in my electorate who agonise over whether they'll keep their private health insurance going, and the rebates for them is a really big deal. The other thing is, those young people who choose to drop off, which means there are fewer healthy people lowering the overall cost of the system, we need them to stay. So that's why some of these figures, the lowest premium increase for ages—2.7 per cent, less than three per cent—have been a really good outcome.

The Medicare levy surcharge is levied on people who have a taxable income threshold currently of $90,000 for a single person and $180,000 for a family policy. They're being frozen for another two years, from July 2021 to July 2023. The indexation amount that has been pre-determined across those three tiers will stay the same until that same time. These are really important issues because we want to have a stable, reliable, health system which, as I said, relies on all those arms. It is very important this bill passes to maintain that sustainability. I commend the bill to the House.

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