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

I move:

That this bill be now read a second time.

The Private Health Insurance Legislation Amendment Bill 2008 will amend the Private Health Insurance Act 2007 and relevant provisions of the Corporations Act 2001, the Australian Securities and Investments Commission Act 2001, the Insurance Act 1973 and the Insurance Contracts Act 1984.

The purpose of the bill is to amend the Private Health Insurance Act and associated legislation. Amendments proposed include private health insurers being required to become a company under the Corporations Act, restricted access insurers being able to include statements about requirements for membership in their constitutions or rules, provisions relating to the regulation of health related business, clarification in relation to corporate products offered by health insurers and provisions to allow pilot projects. Enactment of the proposed amendments will occur at the date of royal assent of the bill.

Proposed amendments will remove the requirement for dual regulation of health related business conducted through health benefits funds by the Private Health Insurance Administration Council, PHIAC, and the Australian Prudential Regulation Authority, APRA. Under the Private Health Insurance Act and the Health Legislation Amendment Act 2007, PHIAC regulates health insurance business and health related business conducted through health benefits funds until 30 June 2008. From 1 July 2008, health related business conducted through health benefits funds was to be subject to dual regulation by PHIAC and APRA. Consultation with industry and PHIAC has revealed that dual regulation will be burdensome and potentially costly.

Consequently, the bill seeks to amend the Corporations Act, the Australian Securities and Investments Commission Act, the Insurance Act and the Insurance Contracts Act to ensure that health related business that is conducted through a health benefits fund remains solely regulated by PHIAC. The changes will carve out health related business operated through a health benefits fund from being regulated under these pieces of legislation.

Another provision of the bill concerns restricted access insurers. Restricted access insurers are private health insurers that limit their membership based on employment, profession, union membership or being part of the Defence Force. The proposed amendments alter the existing technical requirements, in section 126.20(6) of the Private Health Insurance Act for restricted access insurers to specify their eligibility requirements in their constitutions, to allow these requirements to be specified in their constitutions or their operational rules. The proposed amendment will mean that there is greater administrative ease in complying with the Private Health Insurance Act.

There will also be consequential amendments to other provisions including section 185.5(e), section 200.1(1) and section 163.15(2) of the Private Health Insurance Act to include the term ‘rules’ after the term ‘constitution’, allowing restricted access insurers to provide statements relating to their restricted access group in their constitutions or rules.

At present, the Private Health Insurance Act allows registration of a private health insurer as a company, or registered body, within the meaning of the Corporations Act. However, registered bodies only need to meet limited directors’ duties, making it more difficult for PHIAC to regulate the industry. The amendment will require all private health insurers to be companies under the Corporations Act. This measure will mean all insurers are under similar accountability standards and governance requirements, improving equity in the regulation of the industry.

All private health insurers must be companies by January 2010 or their registration as a private health insurer will be cancelled. There is also a transitional provision which provides that, in the unlikely event that a body which is not a company applies to be a private health insurer before the commencement of the bill, the application ceases and a new application which complies with the requirement to be a company must be made after commencement.

In order not to impose an undue taxation burden on those private health insurers applying for registration as a company, those insurers will be exempted from stamp duty tax or other taxes relating to things done solely for the purposes of registration.

The principle of community rating, as defined in division 55 of the Private Health Insurance Act, ensures everybody has equitable access to health insurance. Private health insurers cannot discriminate based on people’s health or for other reasons including gender, race, or sexual orientation.

It has been put to government that it is arguably a breach of community rating for insurers to offer corporate products at a discount aimed at employees and contractors.

The bill clarifies that offering corporate products is not a breach of community rating, provided these products comply with the discounting provisions in the Private Health Insurance Act. It also makes it clear that a private health insurer may not remove persons from a corporate product when they, or another person on the policy, are no longer a member of the corporate group.

There is no obligation on the insurer to offer a corporate product, at the discount applicable to a corporate product, to a person who is not a member of the corporate group.

The government is keen to ensure that private health insurers are well placed to offer broader health cover in their products and policies. However, concerns have been expressed that the community rating provisions of the Private Health Insurance Act may prevent the operation of pilot projects. In order to clarify that these projects are permitted, the bill proposes that the Private Health Insurance Complying Product Rules could permit pilot projects as specified in those rules.

I commend the bill to the House.

Debate (on motion by Mrs Bronwyn Bishop) adjourned.