Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

On 15 May the Private Health Insurance Legislation Amendment Bill 2008, which amends the Private Health Insurance Act 2007, was introduced to this House. It contains five key amendments to the act. This bill will remove the dual regulation of health related business conducted through health benefit funds by both the Private Health Insurance Administration Council, or PHIAC, and APRA, the Australian Prudential Regulation Authority, so that from July 2008 insurance products, when administered through an insurer’s health benefits fund as health related business, will be solely regulated by PHIAC. It will also require private health insurers to incorporate under the Corporations Act in order to apply for registration to the council. This will directly impact on four of the current 38 health insurers which are now registered bodies rather than corporations. They will have until 1 January 2010 to become companies. PHIAC will cancel the registration of any private health insurer that is not a company by that date. This bill also ensures that eligibility for membership of restricted access insurers can be specified in the insurer’s constitution or rules. This amendment will ensure that the application of the community rating rules to discounted corporate products will be clarified. Lastly, the application of the community rating rules to pilot projects for broader health cover initiatives will be clarified.

The coalition have a proud history of supporting measures to improve the regulation of the health industry. In 2006 the health insurance bill was adopted. It was designed to increase competition in the industry and improve services to consumers by allowing insurers to provide policies that reflect contemporary clinical practice. We wanted to make sure that the bill simplifying the legislation surrounding private health insurance would not lead to those insurers being bogged down in compliance requirements. The bill also allowed private health insurance to cover outpatient and out-of-hospital services, including chronic care management of conditions such as diabetes and asthma and disease prevention programs. The 2006 bill also required health insurers to standardise the information they gave to policyholders so that the policyholders could better understand their entitlements under the insurers’ policies.

The expanded scope of health insurance allowed people to access a broader range of services. Coming into effect in April last year, this meant that insurers were finally able to pay benefits for medical services traditionally accessed outside the public hospital system and the hospital system generally. This bill allowed for the best care to be provided in the most suitable location. For example, people requiring cataract surgery could now access this surgery without having to be admitted to hospital. Similarly, cancer sufferers could now have chemotherapy administered at home or in a low-care environment. This step provided another opportunity to provide top-quality health care in a lower-cost environment.

Despite assuring the Australian people that the government would support private health insurance, the Prime Minister has instituted policies that, indeed, seek to undermine it. By raising the Medicare surcharge levy thresholds from $50,000 to $100,000 for singles and from $100,000 to $150,000 for couples and families, the government has signalled its policy of undermining access to health insurance and to choice in health care. In March this year, figures from the Private Health Insurance Administration Council revealed that, yet again, new records were set in private health insurance uptake. The week before the budget was handed down, 9.477 million Australians, or 44.6 per cent of the population, were covered by private health hospital cover. No doubt that will be the peak. Almost 10 million Australians have willingly given themselves a choice of hospital and doctor when they need treatment and care. Significantly, in the 12 months from March 2007, the biggest growth of any age group was among the 25- to 29-year-olds, with an increase of 57,500 members. Now this is all about to change. Private health insurance is about to be dealt a savage blow that will see Australians drop out of private health cover. That number remains a matter of strong conjecture.

The Treasurer told the National Press Club that the government projects that up to 485,000 people will drop their private health insurance as a result of the government’s changes. But a report from Access Economics projects that up to one million people could drop their private health cover. Another report, from PricewaterhouseCoopers, suggests that more than 900,000 extra patients will allow their insurance premiums to lapse. They will therefore rely on the public health system as a direct result of this government’s decision. The government has apparently based its policy on modelling done by Treasury. The government has refused to release this modelling so that it can be held up to proper scrutiny. Generally, advice from Treasury is just as likely to be disregarded by this government if it does not accord with the government’s own political line.

If the Prime Minister and the Minister for Health and Ageing have nothing to hide then why will they not release the detailed modelling of their changes to private health insurance? If the government believe that this policy will merely deliver a mild sting to the healthcare system, they should be prepared to show their modelling. If there are wild exaggerations in the numbers being bandied around by Access Economics, by PricewaterhouseCoopers or indeed even by the Treasurer himself then the government should be prepared to show their modelling to all Australians. The reality is that young and fit Australians will be the first to give up their private health insurance. This will see a redistribution of risk amongst those who keep their cover.

We already know that premiums for everyone will rise to unprecedented levels. Independent analysts suggest the impact could be much higher. On 29 May this year George Savvides, the managing director of Medibank Private, which is wholly owned by the Rudd government, told a Senate estimates hearing that he expects to lose between seven and 10 per cent of Medibank Private’s client base as a direct result of the government’s changes to private health insurance. So the PricewaterhouseCoopers numbers and Access Economics numbers appear to be closer to the mark. If you apply seven to 10 per cent across the 9.5 million people, that is somewhere between 600,000 and 950,000 people dropping out of private health insurance, according to the formula of George Savvides, the managing director of Medibank Private. I am not familiar with the demographic make-up of Medibank Private’s membership base, but it is the largest private health insurer in Australia and you would think that it would have a real cross-section of the community there.

Out of all of this, insurance firms will have no choice but to raise premiums for everyone. In the years ahead these premium rises will be known as the Rudd premium increases. Let it be very clear that the Prime Minister, as a direct result of his government’s initiatives, will be held accountable for every increase in private health insurance premiums from now on. The reality is that, unless hardworking families are rewarded for taking out private health insurance, they may be forced out of it. This government is actively pursuing its important role in watching closely as Australian families struggle under the weight of growing grocery and petrol prices. How are Australian families, already burdened by spiralling rents and the cost of living, supposed to shell out more for private health insurance without having any incentive to do so?

It is not just premium holders that will be hurt if, as Access Economics suggests, we do see a million Australians leave private health insurance. There will be something more than a mere sting in the public hospital system. And this system is cracking under the strain. Waiting lists for surgery continue to grow, and this is in spite of the doctoring of the waiting list numbers by Labor state governments and their bureaucrats. Access block and oversubscribed hospital beds mean that sick patients languish in emergency departments for far too long. There are hardworking, committed clinicians out there supporting a crumbling public hospital system. These clinicians are frustrated. They contact me each day with their concerns about the crumbling hospital system in which they are expected to deliver the highest possible medical care to their patients.

The fact that there is virtual chaos in a number of public hospitals around Australia is no better illustrated than at the Royal North Shore Hospital in my own electorate of North Sydney. The problems at that hospital have been the subject of a significant inquiry by the New South Wales government, extending right across the public hospital system in New South Wales. It is now known as the Garling inquiry. You need go no further than the fact that the Royal North Shore Hospital has had eight chief executives in 11 years. That is not a clinical issue. That is not a problem with the doctors. That is a problem with the administrators—public servants, in that case. Even then, each of those chief executives has clearly sent the message out—quietly, because they will ruin their career if they blow the whistle totally on the New South Wales hospital system—that the reason why they left is that the hospital system in New South Wales is dysfunctional. The fact that they are trying to run a very large hospital like the Royal North Shore Hospital with everyone second-guessing them means that they do not want to be party to the administration of that hospital. They do not want to stay as chief executive. Eight chief executives in 11 years under a Labor government—how could you run any system like that, let alone such a large hospital in such a large hospital system?

The burden on a hospital like the Royal North Shore Hospital is only going to increase as a direct result of the Rudd government initiatives. Rudd government initiatives such as the initiatives on private health insurance and on dentistry, where they are pushing people back into the public hospitals and abolishing dental cover in Medicare, add to the growing waiting lists in public hospitals and add to the already existing torturous levels of pressure.

The coalition believes in choice. That means having a vibrant and viable private health system sitting proudly alongside a high-calibre public health system. This is a choice in health care that Australians want and deserve. Private health insurance is the best way to enable Australians to contribute to their own health care and to be rewarded for doing so. It is no crime to have private health insurance. Contrary to what the member for Maribyrnong said in this chamber on 29 May, having private health insurance does not mean you are rich. He said that having private health insurance means you are rich. That was the Labor member for Maribyrnong. Taking out private health insurance means that you are able and are prepared to contribute to your own healthcare costs and in reward will access choice in healthcare delivery.

The Minister for Health and Ageing, in changing these levies, is seeking to punish those who remain holders of private health insurance. The Prime Minister’s policies will see premiums rise. The minister wishes to see those with health insurance and willing to contribute to the cost of their own health care marginalised. In the process, the minister for health believes this is a revenue-raising measure that will save the government 30 per cent on private health insurance rebates. The fact that every dollar spent on health insurance premiums brings in $2 in health spending is conveniently ignored by the Rudd government. The fact that a mass exodus of Australians from private health insurance will directly impact on the volume of patients seeking treatment in public hospitals is ignored. The fact that private health insurance will now be the only way Australians will have timely access to dental care since the axing of Medicare dental is ignored.

The Australian people have charged this government with handing down good policies that will advance the health of this nation. The government is failing Australians, but we will hold it to account. For example, the Prime Minister personally championed his alcopops tax as an important tool in the arsenal against binge drinking. The coalition disputed the validity of this so-called health measure. We urged the Prime Minister to be honest with the Australian people and admit that the alcopops tax measure is more about tax raising than it is about binge drinking by young Australians. Today in a Senate estimates committee hearing it was confirmed by Treasury that the Australian Taxation Office and the Australian Customs Service were the only agencies consulted prior to the introduction of this tax. The Department of Health and Ageing were not even invited to make a submission. Can you get that! The Prime Minister announces a health initiative on alcopops tax, he says that it is directed at addressing binge drinking and the department of health did not even know about it. As a revenue measure, the government needs to do some basic maths. Treasury have confirmed today that the estimated revenue figures contained in the budget papers rely on an expected growth in the consumption levels of alcopops. This projected growth is above and beyond what the alcohol industry itself was predicting, even before the alcopops tax was introduced.

The Australian Institute of Health and Welfare submission to the inquiry of the Senate Standing Committee on Community Affairs into ready-to-drink alcohol beverages is telling. It found:

... the increased availability of RTDs does not appear to have directly contributed to an increase in risky alcohol consumption ...

The same submission also found that the increase in consumption of ready-to-drinks is apparent in older age groups but that patterns of RTD use among teenagers is unclear. Do those in the advisers box want me to repeat that? The Australian Institute of Health and Welfare submission to the Senate committee said:

... the increased availability of RTDs does not appear to have directly contributed to an increase in risky alcohol consumption ...

It went on to say that the increase in consumption of RTDs is apparent in older age groups—not young girls but older age groups—but that patterns of RTD use among teenagers is unclear. ‘So let’s have a $3 billion tax to address this specific point,’ says the government.

The latest statistics from the Nielsen ScanTrack survey of liquor retailers and independent bottle shops nationwide show that, as planned, alcopops sales have dropped since the new tax and sales of free-pour spirits have skyrocketed to fill the gap. Sales of 700-millilitre bottles of spirits rose by 21 per cent and hip flasks of spirits rose by 20 per cent in the same period. This fits in well with the studies selectively quoted by the Prime Minister in this House. These studies show that teenagers simply switch to alcopops from other alcoholic drinks but that, overall, teens are drinking less or the same amount as they were in the 1990s.

Allow me to refer to the Treasury minute dated 14 May, the day after the budget. The minister for health came into this place in question time and triumphantly tabled a minute, a Treasury document. How extraordinary it was. It would not have happened when the member for Higgins was Treasurer for all those years. I can promise you he would never (a) have tabled Treasury advice and (b) have another minister table his own department’s advice. How absurd! What a hotchpotch way to run a government. You have one minister tabling another minister’s briefing notes. Then, low and behold, the minister for health said that this is the Treasury modelling on the alcopops tax. I thought in good faith that was actually what she was tabling. The interesting thing is that it was dated 14 May, more than two weeks after the tax was introduced. It was not a modelling on the initiative; it was post ipso facto—after the event. Of course you can see the government’s strategy. ‘We’ve got a problem on this alcopops tax,’ says the minister for health, and the Treasurer says: ‘I will get Treasury to whip up a minute. We can parade it as modelling. That will be the solution. We will con the public. We will con the parliament. We will just table this in a triumphant way and claim that this is authoritative.’ It is not authoritative, but in all of those Treasury words there was one sentence that I thought was quite telling: ‘The second possibility is a redirection of alcohol consumption to other products as a result of the change in price of RTDs.’

We know from experience that you cannot take this government seriously when it says something. We also know that it does not take Treasury advice all the time. But, even though the Treasury advice was written weeks after the introduction of the alcopop tax, what do we discover? We discover that Treasury has a qualification in there that says: ‘There are two possibilities. The second possibility is that there is a 50 per cent chance that there will be a redirection of alcohol consumption to other products as a result of the change in price of RTDs.’ I ask whether that fits in neatly with the submission from the Australian Institute of Health and Welfare to the Senate Standing Committee on Community Affairs, which said:

... the increased availability of RTDs does not appear to have directly contributed to an increase in risky alcohol consumption ...

Doesn’t that sit neatly with the Nielsen ScanTrack survey of liquor retailers, which said that sales of 700-millilitre bottles of spirits rose by 21 per cent and sales of hip flasks of spirits rose by 20 per cent after the introduction of the alcopops tax? Instead of delivering a health measure, the government has simply shifted teenagers away from alcopops containing one standard drink per 370-millilitre can to pour-your-own spirits, where they could be doling themselves three or four standard drinks in the same volume of soft drink. The Prime Minister may well have delivered a shot in the arm to Treasury by applying a new tax to alcopops, but the health of Australian children will suffer directly as a result of this flawed initiative.

Why am I raising it in the debate on this bill? Because the government has not introduced the legislation to support their alcopops tax initiative. We are waiting. We have flagged that we will oppose it and we are waiting for the initiative. Even though the tax is being collected, it has not introduced it. I will place on record in Hansard a warning to the government that, if we succeed in blocking this flawed tax-raising initiative in the Senate, it will have a problem on its hands with the accrued proceeds in the same way that the previous government had a problem on its hands when the then opposition blocked some changes to beer excise.

The most significant initiative in health we have seen so far from the new government has seen Australians switch from alcopops to free-pour spirits. The coalition stand for healthy children, we stand for choices in health care, we stand for a vibrant public and private healthcare system delivering quality health care for all, we support private health insurance, and we support amendment bills that make regulation of the private health insurance system fairer, which this bill does. Therefore, we are supporting this bill.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

The Private Health Insurance Legislation Amendment Bill 2008, which I support, contains measures that will amend the Australian Securities and Investments Commission Act 2001, the Corporations Act 2001, the Insurance Act 1973, the Insurance Contracts Act 1984 and the Private Health Insurance Act 2007. The proposed legislation will remove the requirement for dual regulation, which will come into effect from 1 July 2008, of health related business conducted through health benefit funds by the Private Health Insurance Administration Council and the Australian Prudential Regulation Authority. This bill is primarily about cutting red tape and allowing innovation, while ensuring the industry continues to be appropriately regulated. By insisting on appropriate regulation by the Private Health Insurance Administration Council and on the delivery of the sensible measures contained in this bill, the government is showing that it is working with the industry and for consumers. Dual regulation is not advantageous to the industry. The industry does not want dual regulation and government does not want it either. Ensuring that the Private Health Insurance Administration Council remains the sole regulator of health related business operated through a health benefit fund is in everybody’s best interest.

Under the act as it stands, the Private Health Insurance Administration Council is the sole regulator, but only until 1 July 2008. After that, health related business conducted through health benefit funds will be subject to dual regulation, which we see as being unnecessary. This legislation will continue the practice as it stands right now by extending the temporary situation to a permanent one and it will ensure that the Private Health Insurance Administration Council remains the sole regulator for health related business. This bill also stipulates that, by 1 January 2010, those four of the 38 health insurers that are registered bodies and not companies as defined by the Corporations Act must become companies under the Corporations Act. This is important for regulation, as the Private Health Insurance Administration Council could have difficulty regulating entities that are registered bodies because registered bodies need only meet limited standards for directors’ duties. This measure will boost accountability standards and governance requirements for all existing and potential new health funds. This is a big win for consumers and for accountability. The four funds that are required to become companies have been informed and specifically consulted about the requirements of the bill. The bill proposes certain stamp duty exemptions for private health insurers seeking to become registered companies pursuant to the Corporations Act.

Health related business includes goods and services to manage or prevent diseases, injuries or conditions that are not health insurance business. Importantly, it is a product for people who are not eligible for Medicare to cover health services provided for in Australia. The bill also clarifies that health insurers may offer premium discounts to corporate employee groups without offending the community rating provision. An expansion of people taking on targeted corporate rates is a win for both insurers and the insured. This provides clarity to the industry and consumers and encourages more people to take on each attractive corporate discount, potentially saving customers hundreds of dollars a year and increasing membership numbers for funds.

To conclude, this bill eases the administrative burden of double regulation, this bill provides clarity and, best of all, this bill continues the provision of having a single regulator. The bill allows insurers to conduct pilot projects of cover for targeted groups of fund members without offending the community rating provision, encouraging innovation in the industry. These measures will be welcomed by a great many people in my electorate including, but not limited to, international university students studying at the Central Queensland University at Mackay and the James Cook University in Townsville, students residing in southern Townsville and international tourists to such places as the Whitsundays. This is good news also to overseas residents living and working in my electorate, not covered by Medicare and having health insurance. I commend the bill to the House.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

I am delighted and honoured to speak in the House of Representatives chamber once again and delighted to speak on the Private Health Insurance Legislation Amendment Bill 2008 because it goes to the topic of private health insurance, which is very dear to my heart and is of great interest to the constituents of Ryan, which I have the great honour of representing in the federal parliament. The bill proposes to amend the Private Health Insurance Act 2007 and related legislation to remove the dual regulation of health related businesses conducted through health benefit funds by both the Private Health Insurance Administration Council and APRA, the Australian Prudential Regulation Authority, and to require private health insurers to be companies in order to apply for registration to that council.

The constituents of Ryan would be interested in the topic of private health insurance under the new government because a very, very significant percentage of people in the Ryan electorate take up private health insurance. I want to assure them that as their local member in the Australian parliament I am going to be very strongly batting for their interests. I will certainly be ensuring that their voices are heard through my contribution to debate on bills relevant to private health insurance because, such is the take-up of private health insurance in the Ryan electorate, it is imperative that their interests are strongly and enthusiastically represented. For the benefit of the House and the constituents of Ryan, who will be very interested in these figures, I want to inform the House that of the 94,000 people on the electoral roll in the Ryan electorate, 65,384 subscribe to private health insurance. That represents some 72 per cent of the Ryan electorate. They will have a very deep interest in how the new Rudd Labor government intends to go forward with private health insurance issues.

I say to members of the government and the new Prime Minister: please do not forget that people throughout the country who take up private health insurance do so for very significant reasons. They do so because they value their health tremendously and because they clearly want to make a contribution in a macro sense to the overall health of our country because they in a way are not a burden on the public health system. This is a very significant point that those on this side of the parliament certainly treasure and appreciate very much.

The Rudd Labor government would appear to have a philosophical problem with this idea. I certainly questioned the Rudd government’s commitment to private health insurance because of the recent history, as expressed in the budget, which has been very disappointing. I have had remarkable feedback from my electorate about their intense disappointment and their sense of having been let down. I suspect many people throughout the country who might have cast their vote for the Labor government would have private health insurance and they would be deeply disappointed.

One of the fundamental pillars of the party that I am a member of—the Liberal Party—is our deep faith in the freedom of individuals to choose. An aspect of that, in this context, is their choice either to subscribe to private health insurance or not to. We on this side of the chamber cannot see how that issue causes philosophical problems or consternation for the Labor government. It is a very simple proposition: people ought to have the right to choose how they go about their daily life; whether they do not want to send their kids to private schools or to public schools; whether or not they want to take out private health insurance—and they should not be punished for doing so.

I believe that if individuals and families are in a position to choose private health insurance then good on them. In a way, they are making a contribution to the overall health structure of this country and the overall health profile of our nation. Quite simply, they are easing the pressure on our public hospital system, giving those who may not be in a financial position to do so an opportunity to be at the front of the queue for public hospital care. Indeed, it is a very long queue in the state I come from, Queensland. I know that any of my fellow Queenslanders who might be listening to this debate would be all too aware of the very long queue in Queensland. Those who cannot afford private health insurance will be standing in that very long queue or, if they are very ill, they are probably sitting at home waiting desperately for a phone call that will tell them they are able to go into one of the various hospitals in Brisbane to get the care that they desperately need from the tremendously professional health providers and health experts.

I say to the new minister at the table: if I recollect accurately the member for Gorton and I came into the parliament at the same time in 2001. It is remarkable how times have moved for us both. I came in as a member of the government of the day and the member for Gorton came into a party that was in opposition. Just touching on the fact that the Australian people voted for a new government in November last year, as I said in a presentation to the parliament just recently, I have a great respect for the democratic process and I respect the judgement of the Australian people. They decided that there should be a new government, a new Prime Minister and new members of the executive. While of course I regret very much their decision, overall they are putting their faith in the new government.

Many of those people who would have voted for a Labor government, I suspect, would be subscribers to private health insurance. In my case, as the member for Ryan, I want to take this opportunity to thank the people of Ryan who re-endorsed me as their local representative. I certainly know that Australians in Brisbane and across the country that may have voted for the new government would have taken out health insurance and, I suspect, they will be quite troubled that this government seems to be embarking on a course of action and a direction that is inimical to the interests of their health management. I want to make it very clear to the people I represent that certainly they will not be forgotten. I suspect that many working families of Australia and of Ryan that the Prime Minister and the government are very fond of claiming as their own would be tremendously disappointed that the government’s attitude towards private health insurance is as it is.

The Labor Party have stated in the past that they would keep the Medicare levy surcharge, yet we all know now in light of the budget that the threshold was lifted for so many Australians. I think that is intensely disappointing. Ryan is a very young electorate and many younger professional people who would have payment of their insurance premiums at the top of their list of priorities will, in effect, be forced to put private health insurance premiums at a lower priority without federal support.

For completeness of information for the people of Ryan who might be listening to this debate, people earning over $50,000 had to either pay an additional one per cent Medicare levy surcharge or take out private health insurance. If they took out their private health insurance, the government would give them an average of 32 per cent rebate to make private health insurance more affordable. Unfortunately, the thresholds for paying the Medicare surcharge have now been altered. The Rudd government is raising the Medicare levy surcharge thresholds for singles from $50,000 to $100,000, and for families from $100,000 to $150,000. As I keep revisiting this point and restating it, most regrettably this policy will have a dramatic impact upon the working families of Ryan and many younger professional people as well will be detrimentally affected.

I note in today’s Courier Mail a story about the state government in Queensland about to deliver the first Bligh budget. The story goes to funding in the Queensland health sector. It is quite interesting that the new Treasurer in Queensland will be delivering the first Bligh budget and that they are going to focus very significantly on health. That is good: focus on and invest in health; it is about time. You have only been in government in Queensland for nearly 20 years—two decades of a Labor government and they are going to increase investment in the health system in Queensland with some 2,000 doctors and nurses and allied professionals. What have you been doing for two decades?

Nobody from Queensland will need to be reminded of the name, Dr Patel. For those Australians who might be listening from interstate, the famous Dr Patel fell through the net in Queensland and destroyed many lives and families in Queensland with his incompetent medical skills. What that reflects is the shocking way in which the Queensland health system was able to admit him to practise in Queensland.

I have a brother and sister who are doctors, and I take this opportunity to compliment them. My brother is one of this country’s finest young neurosurgeons, and my sister has recently graduated in medicine. My brother quite often reflects with me on the experiences that he has in his fine work. Being a neurosurgeon, there is not much that Queensland Health can do to him. He is one of those rare species of professionals that Australia and indeed Queensland are so desperate to have. There is not much they can do to him given the rarity of his skills and the professionalism he exhibits. The point I am making is that I feel for the patients in the Queensland health system because of the incompetent management of the Queensland government and the terrible stewardship of Queensland Health by the Australian Labor Party, who have run Queensland for almost two decades. I make this observation to the people of Queensland: surely enough is enough. If you have been on a waiting list for months and perhaps even years, surely enough is enough and it is time to send a very powerful message to Labor in Queensland.

In the context of private health insurance, the point I want to make is this: those who are now going to seriously reconsider their financial capacity to take out private health insurance are going to be added to the pool of people that will depend on the public health system. We are about to confront a terrible situation in this country, and particularly in Queensland.

With 10 million Australians signed up to private health insurance, the other consequence of the Rudd government’s budget and the increase in the threshold is that those who do stay in the private health regime are almost certainly going to be facing increased health insurance premiums. They are going to then be another group of people who will exit from private health insurance. The damage to the whole concept and regime of private health insurance in Australia is going to be exacerbated.

I want to briefly compare some of the seats in Brisbane in terms of the percentage of people covered by private health insurance including hospital cover. I say to the members of those electorates to be aware of these figures for 2005, which come from the Parliamentary Library. In the seat of Brisbane, an adjacent seat to Ryan, some 47 per cent of the constituents had taken out private health insurance including hospital cover. In the seat of the government speaker preceding me, the member for Dawson, 45.3 per cent of constituents were subscribers to private health insurance including hospital cover. I mention these seats because they are seats adjacent to my seat of Ryan and there is always a capacity for redistribution. Some of the constituents of either Moreton or Brisbane or Blair could well come into my electorate and vice versa, so these figures are of interest. In the seat of Moreton, 45 per cent of those constituents had private health insurance including hospital cover. These figures are not insignificant. I wonder what the figures are for the member for Gorton’s seat. I will see if I can find those while I am on my feet. The seat of Gorton is a Labor seat held by the Minister for Employment Participation, who is at the table. I congratulate him on his appointment to the ministry—and I am sure he does his best. One-quarter of his electorate subscribed to health insurance including hospital cover. I wonder how many of that 25 per cent will exit the private health insurance regime. Those figures are from 2005. I suspect that that one-quarter of that electorate would not exactly hold the new government in the highest esteem as they reconsider their position.

In conclusion, this bill is really a technical bill. It goes to the regulation of private health insurance in the context of registration for the Private Health Insurance Administration Council. What is of deep interest to me is the theme of private health insurance that is encapsulated in the bill. I reassure the people of Ryan that I represent that I will continue to speak very strongly on their behalf because I know that private health insurance is of deep and abiding interest to them. I thank them for taking out private health insurance because in a sense they are also making a contribution to the wider and larger picture of giving Australians who might not be in such a strong financial position themselves—(Time expired)

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

This is very much like being hit around the head with wet lettuce. We have had a six-minute contribution from the other side on the Private Health Insurance Legislation Amendment Bill 2008, we have had very little opportunity to examine the problems facing private health insurance at the moment and, quite simply, we have the architecture of Australia’s health system being systematically dismantled. I am not about to say that the components of this legislation are necessarily controversial. Of course, some common-sense approaches to the way we regulate health related business in this country is sensible, and the moves within this bill to bring that under PHIAC and away from APRA is supported by this side of the House. But it is a shame that in this rush to get through a score of different pieces of legislation we have not even had a coherent discussion on how we see our blended Australian health system surviving into the next decade. We have not had any sort of discussion short of that usual blame shifting across the chamber, predominantly with the Labor government finding fault with the fact that there were not huge amounts of federal funding made available to state hospitals and therein lay with the former federal government the chief blame for everything that goes on within our state hospital systems. Memo to the government: the debate can continue to spiral to the bottom, and we can talk about nothing else but how bad each other is, or we can look at who is running what and how well they are doing.

It is a shame that on a day like today, when we consider this legislation, we have in my own home state material coming in to leading metro media talking about the difficulties that the Queensland government are facing in health provision. I know my neighbour, the member for Bonner, has already railed about cuts to the funding that ran through the Commonwealth-state health agreement, and I respect the point of view of people on the other side that the indexation of those payments was not as high as in the previous agreement. Under that agreement they were raised significantly to make up for the one before that which, under the previous Labor government, was far lower. So, while there was a significant catch-up in the third health agreement, there was simply restitution to the normal rate of health payment increase in the fourth health agreement, and that has continued to be used as the excuse for saying that money had been ripped out of public health by the federal government.

Whoever wants to blame whomever, what really matters is how well the money is being used. The very problem in Queensland is that we have articles on days like today just like the one in today’s Courier Mail that begins:

QUEENSLAND Health may be scrambling to recruit doctors but the embattled department is not short on the spin variety.

Figures reveal health has ramped up its army of media and public relations specialists and now employs more than a sixth of the Bligh Government’s—

entire PR spin team of 367 public servants.

The 69 staff, who spread the gospel on the resurrection of the public system while limiting fallout from hospital bungles, represent a 40 per cent increase from the 50—

staff who were being using just two years ago. This is post Dr Death. So I say to the Queensland government that it is not a matter of how much money you have; it is how well that money is used. We can continue to blame each other in this chamber, but in the end it is all about what is hitting the ground as far as rubber and traction in health service deliveries is concerned.

Premier Anna Bligh, whose department has 10 media advisers as well as five in the ministerial office, is insistent that all these people are required for informing, promoting and communicating. But it goes to the question of how well public health resources are being spent in Queensland. The answer is in the Australian. We do not have to go back far to see:

CANCER patients are waiting up to almost three times longer for life-saving treatment than they should be at some of Queensland’s biggest hospitals.

So there are benchmarks for what is clinically appropriate that are not even close to being met. The article goes on to state:

... patients are expected to wait ... 27 days despite the “maximum acceptable limit” of 10 days.

The article says that there are a significant number of patients for whom delay in starting will have a significant adverse outcome. The state health minister was unavailable, but the figures, of course, have prompted a storm. The response was:

The department said all category one patients were cleared immediately.

So what you first have to do is change your category 1 to a category that you can guarantee is served and then, of course, all your subsequent categories simply become longer and longer. This is simply robbing Peter to pay Paul. As the AMA has said in Queensland, these figures illustrate the poor planning as much as the chronic underfunding. And that is the basis for tonight’s debate. Tonight’s debate about the future of private health care is simply one of a longstanding and proud tradition in Australia of blended health provision. You can travel to any tertiary institute around the world and they will recognise just how well Australia has done. As the member for North Sydney pointed out only half an hour ago, that was built proudly on three policies, starting with the Private Health Insurance Incentive Scheme of 1997—introduced, I have to remind the House, because of constantly slipping private health levels that started back in 1975. This was a bipartisan consideration. We had private health cover potentially being extinguished within 15 years. Most would know that is not a good thing.

After the 1997 intervention, the Howard government followed up two years later in 1999 with a 30 per cent private health insurance rebate, and that replaced the means-tested subsidy for low-income earners. Then, of course, in July 2000 the final measure was Lifetime Health Cover. In disentangling which of these three policies are responsible for boosting private health cover back up to the mid-40 per cent—and, in some areas of Australia, 50 per cent—academics from the ANU suggest that it is probably the last, the Lifetime Health Cover, although it is a very difficult study to perform for obvious reasons.

The point I want to make is this: you have three policies to improve private health insurance cover in this country. You have one, which is Lifetime Health Cover, which effectively costs the government nothing. You have a second, the 30 per cent private health insurance rebate, which obviously is an expense to government. And you have a third strategy as well, which obviously is the one we are considering in this debate—that is, changing the Medicare levy surcharge, which effectively, in its current form, is a revenue earner for government. Which of those three do you think a government would sensibly remove or tinker with if it was looking to either obtain savings or make the system work better? Sure enough, the savaging of our private health system starts, curiously, out of the three policies with the one from which the government actually receives some revenue. So here we are, trying to be economically responsible, and out goes the one of those three policies that actually has a return to government. That one was savaged first. Building on top of the ‘alcocon’ tax, we are six months into the reign of this Minister for Health and Ageing, and I think average people are right to ask this question: what is going on in health care in the federal government? Where are we heading, who is in control, who is writing this individual’s material and are we just beginning to see the reign of potentially Australia’s worst health minister in history?

That is what we have after six months—a genuine concern that not only has something as integral and complex as binge drinking had nothing done for it except this appallingly mistargeted, misguided tax but we have the systematic unravelling of private health cover that we have seen with the legislation that was debated earlier this evening. My question to this chamber is: do they know what they do? I suspect the other side of the chamber has a poor understanding of the private health insurance system—apart from writing letters of comfort to them before an election—and my fear is that they do not really know what they are doing. That would be the great fear. The great fear is that the sensible move would have been to retract this legislation, tear it up and give ordinary people an opportunity to retain their private health cover.

Do not believe me simply because I am coming from Queensland’s golden heritage of state health provision; believe a letter that has come to a Western Australian colleague of mine. It says:

Please pass on ... Jenny G has just come into the office. She is very upset about the hospital system ... but I just wanted to pass on that she is a self-funded retiree and said she is struggling to maintain her private health insurance. She was very distressed to hear about the impact/consequences of the Labor Govt’s increasing the threshold for people through the Medicare levy surcharge. This will ultimately mean for her that her health insurance premiums will increase to a level where she cannot afford it ...

This is not rocket science; this is plainly obvious. As the member for North Sydney said, probably only an hour ago, when we go to renegotiate the private health insurance premium increases for those that retain it you can expect at least a five per cent increase over and above the normal costs of health—what we call health inflation—thanks purely to the intervention of the government. This is almost like delaying the inevitable and the government has not engaged that concern whatsoever. It has been left for another day. It has been left for the negotiations with the states, where they are presumably going to attempt to pay them off in some sort of agreement that sees private health insurance further on the decline.

It was interesting reading the budget papers, because this measure, appallingly, reads as a government saving. The fact that you can tear people out of private health insurance and savage the system actually delivers for the government a saving of $231.6 million purely from changing the threshold. So, of course, the Australian Health Insurance Association engaged an independent accounting company to see exactly how many rebate payments are required to achieve those budget estimates. They have calculated the government is going to require 613,000 rebate payers—we call them financial units; they could be couples or they could be singles. The great fear is that what Treasury did not realise when they did their analysis of this policy is that individual policyholders also include children. They include financial units, which is a terribly bureaucratic term, and those financial units will be trotting down to public hospitals seeking public provision of their care and waiting in public hospital queues.

Those numbers by AHIA’s estimates are 908,000 Australians or 9.7 per cent of the insured population. That is a very significant slice out of private health cover, and you have to go back a long time to see where we were when we had levels in the mid-30s. It effectively undoes 10 years of health policy; it effectively unravels 10 years of building the base for private health insurance for Australians who are prepared to pay their way in the health system. Of course, what is always ignored in the private health insurance debate is that, if one can look beyond the rebate of 30 per cent, it is ordinary Australians who are electing to pay the other 70 per cent. That is money the health sector would otherwise never see that is put in place for Lifetime Health Cover to cover those who elect to plan for the future and plan for those times when health expenses in the final years of life are enormously significant and beyond the ability of the average Australian to pay.

Now, in deriving the benefit costs of members who may potentially leave private health insurance due to these changes, what was necessary was to exclude from the calculations those over-65s who represent half of all hospital benefit claims. The calculation of the cost of this cohort is $484 million per annum. On the assumption that the budget papers are correct and they are chasing that $231 million saving to which I referred previously, then those extra 908,000 people have to get their health care from somewhere. The question is where? The question is: what services will they be seeking and what impact does that have on state planning? State governments we know from that shift alone will be looking for $440 million in 2008-09 just to cover that movement.

What is patently clear is that the government have not modelled any of the pullout ratios and the pullout velocities of people with insurance. They actually do not know if it is going to drop away suddenly and then flatline or if the great fear that we have in private health insurance cover will occur, which is the snowball effect, which I will come to later.

By engaging an independent company AHIA investigated the ramifications of these figures. The Treasurer has announced figures of 485,000 people who will pull out of private health cover, which we believe is around about half of the number that will. If it is the case that these financial units include children then the costs could be significantly more than are predicted. The second great challenge of course is that you do not know what the mix is of those who pull out of their insurance. Are they predominantly the young? Are they predominantly the healthy? Are they predominantly those who take the simple low-cost private health insurance option to avoid paying the surcharge, who are often referred to within the industry as Clayton’s members? Those individuals who are predominantly high-income earners may well be the most tempted to game the system, and here we have that dreadful term in health insurance policy or insurance policy in general which is ‘adverse selection’. There is a great fear that those who do not need the health insurance make that long-term decision to pull out now. What you simply leave behind is a smaller denominator of those covered who we know are going to need more services and it raises obviously the per capita cost of providing for them.

The double whammy is that many of those who are covered and will remain so are older, have been there longer, are more fearful of Lifetime Health Cover, which of course has not been addressed, and will remain locked into the system. They are predominantly senior Australians worried about their health. They read about the state health systems every day of the week and no $100 million measure with state hospitals is going to reassure them that they will get the surgery that they need. It is these people who want a cataract operation or a hip operation who will cling to their private health cover to the last, and these are the people whom I believe this government is particularly letting down.

What we have is an unknown. We have a genuine uncertainty about how many people are going to leave private health cover. It is one thing to be proposing in this legislation streamlining and making things easier for PHIAC and freeing up APRA from the responsibility of dealing with health related business, but it raises a greater question: where is the government going on health? As I have said before, there were 12 years to come up with a health policy. There have been six months now to determine where we are heading with our provision of health services at state and federal levels. We have had six months to talk about the big vision, the end of the blame shift and the end of cost-shifting. There has been no dialogue on that so far. My genuine concern is that it may never happen. When you have a short-term, spin orientated, poll driven government, as soon as that begins to unravel, away goes long-termism. While the government had strong support in the polls, that was the opportunity to be visionary. That was the time to lay down the road map for the future and to plan for the long term. If it could not be done by the government now in this six-month period, there will be very little opportunity for them to take these tough decisions when it really starts to bite. The great concern is that that may not be so far away.

What we looked for was a vision for health care. It is not that complex. The 2020 Summit pulled together every great health thinker. What we got was mainly health narrative. What we did not get were hard, crunchy ideas for where the health system could go. I think most people who read the summary of that summit said, ‘The health section let us down.’ Very little came out of that to look at reconfiguring health in a concrete way. Sure, there were broad statements and broad brushstrokes, but where is health going to be 12 months from now? As I think we have already seen, average, everyday Australians should have plenty of concerns. If they are planning on keeping their private health cover, they should have genuine concerns. If they are looking for after-hours GP care, they should have genuine concerns. If they are looking for a way of supporting the GP centred healthcare approach, they should have genuine concerns. If they do not, I think they should read the Access Economics report that came out analysing the budget.

The AMA is oft trumpeted for supporting the alcopops tax, but that was only because there was a promise that perhaps some of the derived tax might end up with public health bodies. You do not see public health bodies out there fighting for the alcopops tax. They are merely saying that anything that collects some revenue for public health is a good thing. That is different to support for that tax. The AMA said in the executive summary alone of its report:

The sharp increases in the thresholds for the Medicare levy rebate sends a very confused message.

This is six months into government; it is not three years or six years. The AMA also says the government is ‘struggling with prosperity’. It is like there were a few years of economic sunshine after Australia’s debt had been paid off, with provisioning for the future, and then within months down went business confidence and retirees and seniors were told: ‘You missed out. The times of prosperity are gone. You derived nothing from it and now it is hard times again—tighten your belts.’ That has been the effect of this government—struggling with prosperity rather than managing it. Those are the words of the AMA. The AMA also said:

First, the Government felt that it had no option but to deliver on its election promises.

It is as if the only way through was to honour election commitments even if they now felt they were bad for the country. The AMA said:

The estimated net saving in 2008-09 is highly implausible.

It also said:

The estimates of rebate savings are “doctored”.

That is not me saying that; it is the Medical Association’s own paper prepared by Access Economics based on those policy costings. It also said:

In the past when PHI subsidies have been pared by governments, the impact has been like a rolling snowball.

‘Snowball’ is a term I said I would come back to. The fall in private health cover could well be a rolling snowball, impossible to arrest. Because of the denominator shrink, one simply sees more and more people struggling to meet those costs each year. That will be the great fear for Australians and health planners.

What we need to know here tonight is whether this government has a plan at all. Does it have a plan for health, a direction, an answer for cost-shifting, an answer for recalcitrant states, an answer for ordinary Australians who want to know that their public health system can look after them? Until that guarantee can be made, this government will be letting down Australians. Half of them relied on private health cover and that option is being taken away by the measures put forward by this government tonight.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

I took the view that the deferred division should not be proceeded with until the member speaking at 8 pm had completed his speech, and so I did not interrupt the member. The debate is adjourned and the resumption of the debate will be made an order of the day for a later hour.