Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Minister for Health) Share this | Link to this | Hansard source

I rise to speak on the Health Legislation Amendment Bill 2007. The bill proposes to rectify some unintended consequences of two sets of major health sector reforms implemented by the government earlier this year—that is, the private health insurance reforms, which commenced on 1 April 2007, and the pharmaceutical benefits scheme reforms, the first tranche of which came into effect on 1 August 2007.

Labor supported the original legislation in these two areas, with some amendments, and will support this bill. Can I say at the outset that I am disappointed that we have to revisit and correct aspects of these reforms so quickly. Perhaps the government should be spending a little less time worrying just about their re-election and a tad more time governing the country while they are still in control of the reins. It is disappointing to us to have to be here when very detailed, complex legislative packages have already been through the parliament and through a Senate process.

It may be that the government might actually understand that some of our arguments for having proper consultation periods with initial sets of legislation and allowing for Senate processes might have detected these problems earlier. I am sure that it is very frustrating for the department to have to encourage the Minister for Health and Ageing to come back here and rush through another set of changes after we have been through such a complex process already. So I put on the record that, although we are happy enough to support these changes, we think it is a real indication that the government are not concentrating on the business of governing any longer, that they have become so focused on an election that has not even been called that they do not seem able to take care to get the detail right in their legislation. These two legislative packages were important, they were complex changes and we dealt with both of them in a fairly rushed environment, if I recollect correctly. The fact that we are revisiting them again so soon after their respective commencements points to poor management of detail by the minister when implementing major changes to the health sector.

I have to emphasise as well that, despite the fact that these amendments relate to a package of changes that have been in place since 1 August and 1 April, the first we learnt of this legislation was Wednesday. The bill was introduced by the minister on Thursday and here we are debating it today in the House. I understand that it is listed for debate in the Senate tomorrow. To top all of this off, to add to our litany of complaints about the day-to-day management of legislation going through this House, we were informed last night that there are further amendments to the bill that we will be debating today as well.

I think this smacks, as I say, of a minister and a government who really have stopped paying attention to the detail of governing. They seem to think that legislation is something that should just happily go through this place. Somehow or other the departments and bureaucrats will make it all happen and will be left to tidy up any mess, and the minister should have no accountability for not being able to introduce major legislative reform without us having to be back here within months of that legislation passing the first time. But we have become used to expecting that as the way that the minister operates.

Given that the minister’s favourite phrase at the moment is something similar to that, it may be worth his staff and the departmental officials who are here reminding the minister that you cannot be a serious health minister if you do not have a health policy and you cannot be a manager of government business if you cannot actually manage government business. This bill today is a perfect example of a minister who has stopped being a health minister, who has not got across the detail, who cannot manage government business and who is wasting the time of the House by requiring us to be back here again because he did not take the time to get the detail right to start with.

I am worried, because legislation is something that should be core work for government. It is detailed work and I do not pretend that this package is not difficult. Probably anybody in the sector would have thought that over a period of years there would be times that we would be revisiting the changes as things were tweaked and problems were picked up in the implementation, but to be doing this so soon after their introduction I think is a sign that the minister did not take the care and attention that was needed in first introducing these bills and did not allow for the processes to run for sufficient time—for example, in the Senate committee. Perhaps industry would have raised these issues earlier.

We know that the minister has officially said that he will not deal with these sorts of issues. He has said that he is not going to concentrate on anything that does not involve the election. He is on the public record as saying that and, as I say, it does leave the poor staff in the department, who are no doubt working hard to make this legislation effective, to pick up the pieces around him.

Let us turn to the detail of the bill before us. Schedule 1 proposes amendments to the private health insurance reforms which commenced on 1 April 2007—my birthday, in fact. What a day for those changes to come into effect!

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

Mr Tuckey interjecting

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Minister for Health) Share this | Link to this | Hansard source

I should not have said that, Wilson, should I? These amendments relate most particularly to the arrangements affecting overseas visitors such as tourists, 457 visa holders or overseas students.

To recap, the reforms enacted earlier this year—the Private Health Insurance Bill 2006 and six related bills—introduced a range of reforms to the private health insurance arrangements that included allowing for private health insurers to offer a wider range of products, standardised information about health insurance products, changes to Lifetime Health Cover, changes to prudential arrangements and changes to the role of the regulator—the Private Health Insurance Administration Council. Under the new arrangements, emphasis shifted from the regulation of health funds to the regulation of health insurance products. In addition, various transitional arrangements were introduced.

The reforms included changes that meant that from 1 July 2008 overseas visitors’ health cover would become a general insurance product that could be offered by general insurers and private health funds. Under the new arrangements, overseas visitors’ health cover would not be subjected to the complying health insurance product arrangements established by PHIAC and would not be subject to the community rating arrangements which require insurers to offer products without discrimination on the basis of age, profile, medical history or other risk factors.

This created an inequity between general insurers and private health insurers. While general insurers are not subject to the requirement of the community-rating arrangements and can therefore operate in a risk-rating environment where they can charge higher premiums or refuse cover altogether based on a person’s risk profile, private health insurers who are offering complying health insurance products were bound under PHIAC to community-rating requirements. This potentially placed an unfair burden on the private health funds because private health funds were required to accept risks that their competitors in this particular market—the general insurers—could refuse.

Correcting this potential inequity appears to be the reasoning behind most of the schedule 1 amendments. According to the health minister’s second reading speech:

The act currently provides that all the operational rules of a private health insurer are subject to improper discrimination requirements. However, it was only intended that these requirements apply to the core business of private health insurers—that is, complying health insurance products. The bill will provide that the improper discrimination requirements only apply to complying health insurance products.

A second set of amendments concerns the regulatory environment for overseas visitors’ health cover. The government’s intention under the original reform package was to make the Australian Prudential Regulation Authority, or APRA, the regulator for all overseas visitors’ health cover from 1 July 2008 as a general insurance product. According to the health minister’s second reading speech, however, the government has now decided that from July 2008 overseas visitors’ cover offered by private health insurers will be regulated as a health related business by PHIAC, while cover provided by the general insurers will be regulated as a general insurance business by APRA. The explanatory memorandum provides no information about this regulatory change. The only explanation offered by the minister in his second reading speech is that the decision was made after consultation with APRA and PHIAC and that:

This parallel approach will remove the potential for regulatory overlap and minimise the compliance burdens on health insurers who now offer the service, while not preventing potential new providers from entering the market.

The amendments will remove the requirement that health funds who offer overseas visitors’ health cover during the transition period from 1 April 2007 to 30 June 2008 must offer it as a complying health insurance product. In essence, this means that insurers can offer products to travellers that do not provide the full or same cover as that offered to residents. It also means that health insurers and general insurers will be treated consistently in providing these products to travellers. Penalties for not offering this as a complying health insurance product will also be removed, retrospective to 1 April 2007. We understand from the Australian Health Insurance Association that the private health insurance industry is generally in favour of these amendments and in fact has been trying to have a number of the minor issues fixed in this fashion. So, as I indicated at the beginning, we will support these amendments.

Turning to schedule 2, these amendments concern the Pharmaceutical Benefits Scheme reforms which came into effect on 1 August 2007. To recap for the House, in May 2007 a bill amending the pharmaceutical provisions of the National Health Act was introduced into the House of Representatives. Subsequently, the bill was passed by the Senate and came into effect on 1 August 2007. The legislation introduced significant structural changes to the pricing of medicines subsidised under the PBS and was the subject of a Senate committee inquiry.

The amendments in this bill propose to clarify and correct provisions in the recent reform package that affect the pharmaceutical benefits around pharmacists: firstly, supplying substituted brands of prescribed medicines; secondly, supplying repeats of medicines; and, thirdly, supplying medicines early. Prior to the implementation of the new legislation in August 2007, pharmacists could substitute an equivalent brand under the early supply arrangements. However, the reforms introduced in August inadvertently narrowed the definition under the early supply provision so that pharmacists could no longer substitute different brands. This bill proposes allowing the substitution of different brands under the early supply arrangements, provided the brands are described as equivalent in the schedule. In essence, the changes here ensure that pharmacists can continue to substitute in the way they did prior to the changes, as well as in the new ways that will be encouraged by the major reforms of earlier this year.

Let me deal briefly with those three different categories. In relation to substitution arrangements, under brand substitution arrangements pharmacists are allowed to substitute to the lowest priced approved bioequivalent generic product with the permission of the patient and provided the prescriber has not directed otherwise on the prescription. The government subsidises only to the lowest priced drug in the defined subgroup and consumers pay any difference in price in addition to the usual copayment. This bill clarifies that a prescriber does not need to specify the exact brand of medicine when writing the prescription. A prescription will be valid even if the brand is not specified, although a listed drug and its dosage or form must be specified. The bill further proposes restricting substitution arrangements to only those medicines specified in the schedule so that pharmacy prepared medicines do not qualify as substitutes.

In respect of repeats, the bill proposes applying permissible repeat prescription arrangements to schedule equivalent medicines. Under PBS arrangements, a prescription can specify a number of repeats so that the patient does not need to return to their doctor to obtain a new prescription every time they complete a course of medicine. The maximum number of repeats for a subsidised medicine is specified in the schedule. The proposed amendments prevent the number of permissible repeats being exceeded by prescribing more than one schedule equivalent medicine in a prescription.

Finally, on the early supply provisions, under the PBS arrangements, when a patient has a repeat prescription for a PBS medicine they normally cannot obtain repeat scripts until 20 days after the supply of the original prescription. This is designed to prevent stockpiling of medicines. However, in special circumstances, the patient can obtain a script early or immediately under the immediate supply provisions of the PBS—for example, if the original medication is lost or damaged. These early supply prescriptions do not count towards the PBS safety net.

We understand that industry groups have been consulted on these amendments concerning the PBS reform, and, while the Generic Medicines Industry Association have expressed their support for the amendments, we understand that Medicines Australia has questioned the need for these reforms. We also understand that Medicines Australia has flagged some additional recommendations regarding the need for the minister to seek Therapeutic Goods Administration advice before something is declared bioequivalent. I would welcome clarification from the minister or departmental officials about where this stands.

I fear that this issue flags that we might be back before the parliament again for yet another set of changes on these issues. The minister may not have been here for the start of my speech, where I indicated our support for these changes and our understanding that we are dealing with complex reforms. But to be so quickly back before the parliament on two major reform packages that the government has been very proud of and to be having to fix up work that the minister did not pay sufficient attention to the first time around indicates that the minister has taken his eye off the ball in terms of his ordinary duties as health minister and become far too focused just on electioneering. Minister, the community expects you to continue to do your duty as the health minister. Perhaps take a little more care in passing legislation through this House in the first place and allow sufficient time for it to go through Senate committees and for adequate consultation with industry and consumer groups so that major changes like this are passed in the best possible format and we are not repeatedly here before the House month after month making minor changes that could have been dealt with earlier. We would ask that the minister and his office continue to keep us properly briefed if another set of changes is about to be proposed. I flag my concerns that the additional amendments on top of these two that have brought us back to the House today were flagged to us just last night. I know we will be addressing them separately, but we are certainly not in a position to be able to indicate any enthusiastic support or strident opposition for yet another change that was just dropped on our table minutes before we had to debate it.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

I find it quite interesting that someone legally trained like the member for Gellibrand needs to take advice on the proposed government amendments in the Health Legislation Amendment Bill 2007. I am not legally trained and it seems to me that they deal with disclosure of interest in a very proper way. It may have been an omission in the original legislation, but they simply say that, if you have a pecuniary interest and you are a member of the commission involved in making a decision, you have to go out of the room. This is a longstanding issue that arose in local government over years—whether the declaration of a pecuniary interest was sufficient and you could stay there and keep a beady eye on those who voted one way or another or whether you had to leave the room. It appears that that legislation is primarily for that purpose, and it would seem rather strange that that could not be deduced from the very simple words of the government amendment.

As the member for Gellibrand has advised the House, I do not think it is necessary for me to repeat those matters. We are looking primarily at amendments to some very worthwhile legislation that needed some finetuning. It is all right for the member for Gellibrand to blame the minister and further imply that he spends most of his time servicing the parliament in terms of the political interests of this party and the people of Australia, but the people who put this documentation together on our behalf are the parliamentary draftsmen and I think it is bit unfair to criticise them for overlooking a matter that, once an act goes into service, is identified by certain interest groups. Governments and parliaments typically respond to that. This is a piece of legislation that is correcting a too tight definition—just sticking with pharmacies for a minute—of pharmacists’ right to provide alternative drugs of the same manufacture, competency or efficacy. That seems to me to be very sensible.

Secondly, the other proposal is to provide effective and well-regulated private health insurance to visitors to this country. Around the world Australians are always told: ‘Don’t leave the shores of Australia without private health insurance because of the problems you can experience in other countries,’ and we don’t. But what does a nation like Australia do if a backpacker or an elderly tourist comes here and finds themselves needing medical or hospital assistance? Do we tell them: ‘Sorry mate. You’d better die on the doorstep.’ No. Because of the type of people we are, we will take them in. They may not have the financial capacity to pay but the nature and compassion of Australians is such that it becomes a burden on the taxpayer, which could be removed if we encouraged people who have not made arrangements in their home country to take out private health insurance on arrival. It is protection for taxpayers—and I made some points about that earlier today. When people talk about the blame game and say that the Australian parliament should pay for the mistakes of state governments, it means that people pay for a service twice because provisions have not previously been made. So this is very sensible legislation: it makes sure that the services that private insurers can provide are extended more practically to visitors.

As has already been said, the alterations to the pharmacy legislation are to make more opportunities. I am not surprised that Medicines Australia are not entirely enamoured of this legislation, because they are dependent on their brand names and defend them very rigorously. I do not necessarily criticise them for that; they spend a lot of money in building up a brand name. They might be the original investors, but eventually their products go out of patent and as such they no longer have any protection other than their brand. If legislation is such that pharmacists are restricted to one brand, it is an extra cost to the taxpayer and/or the person seeking those drugs. All this makes a lot of sense. As I said, I see nothing of great complexity in the government’s amendments, and maybe the minister who is present will be able to enlighten the shadow minister if she is listening on the television set—she is not here, of course—on that matter.

In closing, there is one aspect of this debate that this legislation gives me an opportunity to speak to—the great benefit that private health insurance and the private hospital system bring to the people of Australia. I have to say to the minister that we still have some silly provisions like community rating, which says a good risk pays the same premium as a bad risk. That is just a silly concept in the field, but it is there and it has some iconic status. It is a message to the young and the healthy not to privately insure, but we have other sorts of sticks and carrots to try and bring those people into the private insurance arena.

In the dying days of the Keating government, there was a clear conspiracy to destroy the private hospital system, and that was done because private hospitals survived on private health insurance. Private health insurance, because it had to assume all the bad risks, had a rapidly escalating premium structure and, for every massive increase, there was a corresponding departure of those who thought they were unlikely to use the services—the good risks, which are fundamental to all insurance policies. So there was a massive escalation in premiums and the participation of Australians crashed, and there were private cheers in the backdoor ranks of the then Labor government because this was their intention.

It is interesting to note that—although I think they might stop using the word—in his early remarks the Leader of the Opposition, in giving some suggestions as to how they might overcome the disastrous management of public hospitals by state government agencies and Labor governments, said, ‘If they won’t do this, I’ll just nationalise it.’ That is a pretty interesting comment because I was around when Australia was deeply concerned by the intentions of a particular Labor Prime Minister who wanted to nationalise the banks.

Nationalisation has all sorts of implications. There is a service available in the world called the British National Health Service, and I have had some inside information on that from a relative of mine who served within that system, building up her experience to become a specialist. She was only able to give five-minute interviews to the patients who came before her. In her first day she was attacked by one of her patients who said, ‘I’ve been waiting two hours.’ When she went out to the receptionist she said, ‘How could this happen?’ The receptionist said, ‘Well, we book one in every five minutes.’ Yet in the particular specialty involved there was a requirement to disrobe. That is British national health.

Of course, the first rule of running a public hospital is not to have too many patients, because you have got a block budget and a patient is a liability. So if you are an administrator you have to be careful about them. How do you address that? You address it with waiting lists. Con Sciacca, a man whom I admired in this place because he did so much for veterans, decided during his time as a minister to sell the veterans hospitals that were the property and the responsibility of the federal government. It is of great interest to me that whilst New South Wales and Victoria decided to take on the responsibility for those hospitals under their public hospital systems, the governments of Queensland and Western Australia said, ‘No, thanks,’ and a company called Ramsay Health Care took over.

I do not know how it worked out in Queensland but, as the then shadow minister for veterans’ affairs, I know very well how it turned out in Western Australia. The representatives of the RSL were deeply concerned about losing the umbrella of government in terms of the management of that hospital in Western Australia. Yet they told me, weeks after the takeover by Ramsay, that they were delighted. Suddenly, those of their membership who were in the hospital were actually having meals that were cooked within the hospital, instead of frozen TV dinners. And the waiting list of 10 months for elective surgery was wiped out in three months by a rather simple measure: the Ramsay people opened the operating theatres on Saturdays. I do not know what sort of AWA they used, or anything else, but they gave a service on Saturdays and because this very expensive technology—which should clearly operate seven days a week—was able to be utilised for an extra day they were able to wipe out the waiting list at that hospital. Why? Because they had a contract with the government that said, ‘We pay you for the people you look after.’ That is the same contract the private hospitals have with private health insurers. In other words, there is an incentive under private health insurance to give people prompt and timely service. The public hospital system works on exactly the opposite arrangement, that you cannot afford to have too many people in your hospital.

I just wanted to make those points, and this particular legislation has given me the opportunity to do so. I do not want to hold up the House too much more. I am sure the minister can satisfy the member for Gellibrand on the areas of her concern as to what is otherwise quite simple legislation. But we should never forget that had the Labor government of the period been elected for another term of office, I do not think we would be talking about private insurance today. Of course, measures have been taken, and one of the most important is that we now give a subsidy of between 30 and 40 per cent to older persons to ensure they can get prompt service out of the private health industry. Thank you very much.

Tony Abbott (Warringah, Liberal Party, Leader of the House) Share this | Link to this | Hansard source

in reply—I do not want to further detain the House other than in ways that are absolutely necessary. I thank both the member for O’Connor and the member for Gellibrand for their contributions in the debate on the Health Legislation Amendment Bill 2007. I particularly thank the member for Gellibrand for the time she has taken to delve into this and to assess it. I will not repeat what was covered in the second reading speech but, in considering the Pharmaceutical Benefits Scheme amendments in this bill—and I think this will help the member for Gellibrand—I want to clarify the process which underpins the flagging of a pharmaceutical benefit in the PBS to show that it can be substituted for another equivalent pharmaceutical benefit or benefits. The practice for determining equivalence is that a sponsor has submitted evidence to the Therapeutic Goods Administration that a medicine has demonstrated bioequivalence or therapeutic equivalence against another medicine. The Therapeutic Goods Administration may also conclude bioequivalence between two medicines on the basis of the route of administration and the formulations of the products concerned. Bioequivalent and therapeutically equivalent medicines can be expected to produce the same clinical effects and to have the same safety. This is a technical assessment, and it is my intention that this practice will continue in effecting the provisions outlined in the bill. I commend it to the House.

Question agreed to.

Bill read a second time.