Jane Prentice (Ryan, Liberal Party) Share this | Link to this | Hansard source

The committee received very strong evidence that this bill will impact most heavily on low-income families. GMHBA Health Insurance, a not-for-profit private health insurance provider in regional Victoria, said that this measure will result in a one per cent to 18 per cent, with an average of 10.6 per cent, price increase from 1 July 2013 and will impact on 40,000 private health insurers in their fund alone.

GMHBA have also said quite clearly, 'Taking the rebate away from those with a lifetime health-cover loading is, in fact, highly discriminatory to low-income earners who have taken responsibility for their own health by insuring themselves privately.' These bills are aggressive and, as the committee was told, they will heavily impact on low-income families. The coalition also noted in its dissenting report the impact of the government's unstable policy setting that has arisen as a result of the third change that the government is proposing in relation to private health insurance. It is putting forward measures before we can even discern the full impact of previous changes to private health insurance.

Passing this bill today would make that job even harder. Furthermore, the changes to the LHC loading create further complexity for patients and health-insurance providers. The previous means-testing changes had already created around 12 pricing structures for premiums, adding complexity to the private health insurance system. Providers have only until 1 July 2013 before these new regulations come into effect—a further increase in the compliance cost and the administrative burden on private health insurers. This bill will cease the claiming of private health insurance rebates through the Department of Human Services, which is known as the Incentives Payment Scheme—a change that will take effect from 1 July 2013.

The explanatory memorandum to this bill states that at present over 99.9 per cent of rebate claims are made through the Premium Reduction Scheme, PRS, and tax offset claiming, leaving very few rebate claims done through the incentive payment scheme. This figure has been confirmed by organisations in the private health insurance industry—such as Private Healthcare Australia, which has said that a limited number of people will be affected by this change.

If elected, the coalition will deliver a strong, prosperous economy and a safe, secure Australia. We will do this by building a five-pillar economy, including in-advance services and the delivery of better health services. We will do this by strengthening Medicare and taking pressures off the public hospital system by restoring the private health insurance rebate as soon as we can do so responsibly. We will also work with the states to ensure that hospitals are managed by local hospital boards so all communities can have better health services and better value for their money. We will improve mental health services, fund diabetes research and restore the commitment of the federal government to medical research. That is the coalition's plan for health services for Australians, and part of our plan to improve the lives of all Australians.

Taken together, this bill is a further move by this Gillard Labor government to damage the private health insurance industry which it has been doing since it was elected in 2007. Previously, Prime Minister Gillard and the Labor Party promised that there would not be any change to the private health insurance rebate, a promise to the Australian people on which they have now reneged. This bill is a backward step for this government. The government continues to make cuts and so-called savings measures that hurt the hip pocket of Australians. Today's changes will discourage Australians from obtaining private health insurance and, worse, low-income Australians will be disproportionately affected.

As the shadow minister for health highlighted when speaking on these bills, the record debt and deficits that the Labor government has racked up has left the budget in an urgent situation, which leaves the coalition with many tough decisions to make in this and other policy areas, as is so often the case. It will be therefore up to the coalition to right so many of the wrongs that this incompetent Labor government has left for Australia. Only the coalition can offer hope, reward and opportunity.

Andrew Southcott (Boothby, Liberal Party, Shadow Parliamentary Secretary for Primary Healthcare) Share this | Link to this | Hansard source

Labor's debt and waste have now led to the situation where we have a budget emergency. Instead of reining in the waste, instead of addressing the debt, Labor have used this opportunity to attack those who hold private health insurance. This is not the first time Labor have done that. Despite going to the 2007 election saying there would be no changes to the private health insurance rebate, there has not been a Labor government budget since then which has not attacked those who hold private health insurance. When Labor left office last time, the private health insurance industry was in a terrible state. Levels of insurance were about to fall below 30 per cent. The situation required a combined package of lifetime health cover, the Medicare levy surcharge and rebates to restore the levels of private health insurance to a sustainable level.

Lifetime health cover is a loading on private health insurance premiums for those who do not take out hospital cover before they turn 30. The loading rate is two per cent for every year that the individual is over 30 when they take out hospital cover. It has a cap of 70 per cent. It was introduced to address the situation whereby people would self-insure or people would make a judgement about whether they would need health insurance. You tended to have younger, fitter, healthier people not taking out health insurance and the insured population, as a result, being more likely to claim. That led to an unsustainable position.

Lifetime health cover was introduced by the Howard government. It came into effect on 1 July 2000. It is one part of those private health cover reforms that significantly increased private health insurance coverage. It was intended to ensure that people take out private health insurance at an early age and maintain their cover. The previous coalition government's changes to private health insurance reforms—the 30 per cent rebate, Medicare levy surcharge and lifetime health cover—saw coverage increase 75 per cent from 6.1 million to 10.7 million. The coalition has a strong track record in supporting private health insurance. We understand the very important role private health insurance play in taking pressure off the public system.

This bill enacts the changes which were announced in MYEFO 2012-13. The changes to lifetime health cover are due to take effect on 1 July 2013. Currently, the government pays the private health insurance rebate on the value of the total premium paid by the policyholder, including the lifetime health cover component. This bill will remove the private health insurance rebate on the lifetime health cover component. It will bank $386.3 million in savings on top of the $2.8 billion that Labor have already ripped out of private health insurance by means-testing the rebates from 1 July 2012. The changes to lifetime health cover in this bill will increase premiums by up to a reported 27½ per cent. This change will add extra complexity to the private health insurance system. This complexity is on top of the 12 different private health insurance premium pricing structures created by the means test.

These changes to lifetime health cover increase the red tape, increase the regulatory and administrative burden, for private health insurers. What is worse, once again, there is a very short time frame for insurers to implement these changes. The coalition does not support the changes to the treatment of lifetime health cover in this bill and will move amendments to oppose this aspect of the bill.

This is not the first time the government have broken their promises on private health. The Prime Minister and other ministers repeatedly ruled out any changes to the private health insurance rebates before they were elected. They did one thing before they were elected and did another thing once they were elected. As I said before, 10.6 million Australians have hospital cover. In my electorate, 76.3 per cent of voters are covered by private health insurance. The government's own Private Health Insurance Administration Council found that, in five years of the Labor, government exclusions and restrictions became much more prevalent. The increased use of exclusions may work against the policy objective of private health insurance easing the burden on public hospitals. The full effect of Labor's changes to private health insurance still has not been felt. PHIAC reports that there were $1.2 billion in prepayments as people tried to defer their premium increases. This has delayed the pain of Labor's cuts to private health insurance.

I would like to touch briefly on the second bill, which deals with the base premium. This bill has been rushed through the parliament without allowing the opposition enough time to consider it through normal processes. Those opposite have broken another convention of government. It was only introduced in the last sitting week, and it was then rushed through for debate today. They have listed this bill in cognate because they are trying to hide from the responsibility for their incompetent budgets. They are playing politics to shift the blame for their own terrible decisions. This government has turned a $20 billion surplus into five budget deficits. What we now have is a budget emergency. The opposition has problems with this bill but, in light of the budget emergency, we will not be opposing it.

I would like to say a little bit about the key role that private health insurance plays. Private health insurance is important for giving choice. In my electorate, as I said, three-quarters of voters hold private health insurance. Since this government has been in, at every opportunity they have made a tax on those people who hold private health insurance. We have said that we will restore the private health insurance rebate as soon as we responsibly can. Unlike those opposite, this commitment is part of our DNA. We think that the private sector plays a very important role. It is a very important part of the capacity of our hospital system. It is very important in the area of allied health—dental, physio, OT, speech therapy and optometry.

Alan Tudge (Aston, Liberal Party) Share this | Link to this | Hansard source

I rise also to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 and the cognate bill in front of the parliament today and express my grave concerns in relation to them. These bills represent another hit to the private health insurance rebate by the Rudd-Gillard government. They have already means tested the private health insurance rebate, which experts recommend will put up premiums by 10 per cent across the board. With these bills, the lifetime health cover loading will no longer be covered by the private health insurance rebate. Secondly, the rebate will be worth less each and every year once the new indexation arrangements are brought in. For a government that promised time and time again not to alter the private health insurance rebate, they have now ripped about $4 billion out of it and have made things tougher for families.

For those who are not aware, the lifetime health cover loading was introduced by the Howard government as part of package of reforms aimed at increasing the uptake of private health insurance, particularly for younger people. It is a loading on private health insurance premiums that is applied at a rate of two per cent for every year that an individual over the age of 30 takes out hospital cover, and a cap of 70 per cent is applied. It is intended to ensure that people take out private health insurance at an early age and maintain their cover. Currently the government pays the private health insurance rebate on the total value of the premium paid by the policyholder, including the loading component. This first bill will cease that arrangement.

The second bill takes a further hit to the private health insurance rebate. It effectively reduces the value of the rebate each and every year. As you would be aware, it is a 30 per cent straight health insurance rebate presently. But the impact of this second bill is that, over the years, it will effectively reduce from 30 to 29 to 28 to 27—and keep going.

I do not support these bills and will not be voting for them. I would like to outline, in the time I have available today, why I do not support these two bills. In essence, I can summarise it by saying this: the legislation will put up prices; that means that people will drop out of private health insurance; if people drop out of private health insurance that puts more pressure on the public health system, which is already under pressure; and, fourthly, it is a broken promise—another one—from this Labor government. If I come to that first point, the impact of these two bills is that the prices of private health insurance will be put up for everyday families across Australia. If there is one thing that people are concerned about in our community today it is cost-of-living pressures. They see their electricity bills go up, they see their gas bills go up, their water is going up, their rates are going up, child care is going up. Many of these things are going up because of government policy: through additional regulations, things like the carbon tax and, not content with putting up those other costs, through these bills which will put up the cost of the private health insurance.

There are 1.2 million people across Australia who are subject to a lifetime health cover component. That is about 14 per cent of all people who take out private health insurance, and in my electorate that translates to 12,000 people. For each of these 1.2 million people, their costs for private health insurance will rise for the simple reason that that loading will no longer receive the rebate. It is very straightforward: that loading will no longer receive the rebate, which means their costs will go up. The industry believes that this measure alone will put costs up by an average of 10 per cent and for some people it will be up to 27 per cent. Further, the lifetime health cover will no longer be removed after 10 years, short-changing those who have, in good faith, been waiting to have their loading removed. That is just the first bill.

The second bill applies across the board to every single private health insurance policyholder because that bill, the Private Health Insurance Legislation Amendment (Base Premium) Bill, has the effect over time of reducing the amount rebatable. As I said earlier, everybody knows that it is a 30 per cent private health insurance rebate. But the effect of this bill—even though it does not expressly state this—is that over time that 30 per cent will be reduced every single year and will continue to be reduced.

The mechanism the government has for doing this is an indexation mechanism whereby the government's contribution to the private health insurance rebate would be indexed annually by the CPI rather than by the increase in actual premiums. Quite frequently, there are two to three percentage points difference between those two measures, between the CPI—which, as you would know, Madam Speaker, is targeted between two and three per cent—and the cost increases of actual premiums, which are frequently five to six to seven per cent per annum.

That difference makes all the difference on this occasion. What it effectively means in plain English is that the rebate is worth less every year. That means that out-of-pocket expenses for every single family across Australia that has private health insurance will go up. Make no bones about that. There are approximately like 85,000 people in my electorate who have private health insurance. About 70 per cent of all families take out private health insurance.

What happens if out-of-pocket expenses for private health insurance go up? The simple answer is that many people will drop out. That is the simple answer. They will not do so immediately, and many people will try to hold on to their private health insurance cover for as long as possible, because—as you know, Madam Speaker—people want private health insurance for the peace of mind of being able to get their own doctor or their own specialist and being able to go to the particular hospital that may be near them, such as the Knox Private Hospital in my electorate. They will do everything they can to maintain their private health insurance for as long as possible. But if the prices continue to go up, as these bills will cause them to do, some families will simply have to drop out of private health insurance.

Labor would have you believe that it is only the wealthy people that take out private health insurance, but that is simply wrong. If you look at my electorate alone, 70 per cent of people take out private health insurance. I live in a very middle-class electorate. It is Middle Australia, and 70 per cent of people take out private health insurance. When you look at the annual statistics, 5.6 million people with private health insurance have an annual household income of less than $50,000; 3.4 million people have an annual household income of less than $35,000, and they take out private health insurance. Those families on that sort of annual income are already struggling with the increases in electricity prices, in gas prices, in childcare prices, in their rates, in water prices and in all of the other things which are going up well in excess of inflation. These bills are just going to make it so much harder for them, and I think that, particularly for those low-income families, many of them will have to drop out. They will have to drop their private health insurance because they can simply no longer afford to keep it.

If people drop out of private health insurance, what does that mean? It does not mean they no longer have health problems. That is preposterous. What it means is that, instead of going to the private hospital, they go across to the public hospital. As you know, these public hospitals are already stretched to capacity. There are already long waiting lists at public hospitals, and the waiting lists in part got longer because they had $1.6 billion of cuts made to them in the last midyear financial update, last December, as the shadow minister for health has pointed out. How are these public hospitals supposed to cope if even a small number of the people who are currently covered by private health insurance drop their cover and then go into the public system?

When you look at the procedures that are done in the private hospitals, it is quite incredible—78 per cent of knee procedures are done in private hospitals, as are 81 per cent of same day mental health treatments, 60 per cent of cancer therapy and 57 per cent of hip replacements. One has to ask the question: what happens if all of those surgeries and operations have to be done in the public system? The public system will not cope and it just means longer waiting lists for those in the public system who are waiting for their knee procedure. There are longer waiting lists for those people who are waiting for a hip replacement.

My final argument as to why I will not support these bills is because this is a further broken promise by this government. Look back through the transcripts, the comments and the promises which the Labor ministers have made going back for the last eight years, starting in 2004, then in 2005, 2006, 2007, 2008, 2009. Every single year, the Labor ministers, the Labor government and Labor in opposition promised that they would not touch the 30 per cent private health insurance rebate. Nicola Roxon said in February 2009, plainly, simply and unambiguously, very clearly:

The Government is firmly committed to retaining the existing private health insurance rebates.

Steve Lewis asked her, as health minister at the time, on Meet the Press earlier:

So you will not wind back that 30% private health rebate, despite the fact that Labor has been ideologically opposed to it in the past?

Roxon replied:

No, we won't.

It does not get much clearer than that. Labor promised through thick and thin that they would not touch the private health insurance rebate. They did so because they know how many people rely upon that rebate to make private health insurance affordable for them. This is another broken promise. That is what these bills represent.

The Australian public is sick of broken promises. They are sick of having the carbon tax which was promised to never come in. They are sick of the fact that billions of dollars are spent now on border security, despite a promise not to unravel that system. They are sick of all the other broken promises which they have to put up with. They should not have to put up with further broken promises in these bills.

In the last minute or so maybe I should address the question why the government is putting forward these bills. Given they are going to put up prices for families, given it is a broken promise, given that it is false economics because it will just put more pressure onto the public system, why is the government going ahead with these two bills? There are two simple answers to this. The first is that they have always had an ideological objection to the private health insurance rebate scheme. Steve Lewis, a very respected journalist, noted that in his comments and his questions on Meet the Press that I referred to earlier. We know that Labor do not like it and they never have. They have supported it through gritted teeth on the eve of elections but they do not like it. The second reason that we have these bills is because Labor have completely blown the budget, that they are now in such a financial mess that they are looking at every avenue to try to make savings.

These are bad bills which we will not support. The private health insurance rebate is part of the coalition's DNA and, should we win government, we will seek to restore the full rebate as quickly as the budget— (Time expired)

Sharman Stone (Murray, Liberal Party) Share this | Link to this | Hansard source

I too wish to speak about the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2013 and the Private Health Insurance Amendment (Base Premium) Bill 2013. It should be an abiding principle in this country that Australians are encouraged to meet their own health related costs where they have the capacity to do that.

Under the Howard government, in particular with the first Howard minister for health, Michael Wooldridge, the coalition changed policy to particularly target younger Australians, to encourage younger Australians to take up health insurance and to take it up for a lifetime. We wanted them to maintain that insurance during their most active years but in particular into their older age or during their family and child-bearing time so that we could ensure the always finite resources for health covered as many in the Australian community as possible. There was not going to be good health for those who could afford it and a poorer health outcome for those who were less financially secure. All of that requires a substantial number of people in Australia to have private health insurance.

We understood only too well the pressures on the public health and hospital systems as they battled to keep down their waiting lists and as they battled to have reasonable waiting times for those needing non-emergency medical procedures, because we were appalled by stories of the elderly waiting for years for hip or knee replacements that would give them a pain-free and more active life. And why were they waiting for years? Because they did not have private health insurance. We were appalled by the fact that people without private health insurance would put off seeking medical diagnoses for issues and problems and therefore come late to treatment, often leading to very much poorer outcomes for those individuals.

An efficient private hospital sector is key to reducing waiting times and providing a competitive environment for the provision of health services in Australia. But this is the third destabilising move by Labor which leaves those with private health insurance less able to afford it and in a real quandary about what is the future in relation to what they can afford in premiums in, say, five, 10 or 15 years. What can they actually afford to drop in terms of the package that they are currently covered by under their private health insurance given their age or other family circumstances? This is introducing a real quandary in the minds of families who know how important it is to be able to get that medical support when their family or their loved ones need it but who have to make very serious assessments about what they can afford and what the Labor changes really mean in terms of costs in the near and further future.

The government has in fact failed to model the impacts of these latest changes. We are not quite sure what the lifetime health cover initiative impacts will be. We know they are going to put the prices up for private health insurance but we do not know exactly how, and that is a significant problem for both the insured and the insurers trying to work out what is going to be best for them into the future. Of course, a Labor government did give what was supposedly a cast-iron election commitment that they would not destabilise the policy environment for private health insurers and customers but, sadly, like so many other of their promises, this was not worth the paper it was written on. As I say, this is their third go at the private health insurance system and sector in Australia.

We have just heard from the previous speaker that in his electorate he had 70 per cent of his constituency privately health insured. I know him well and I know the member for Aston, Mr Tudge, has a middle-class outer-eastern-suburb constituency in Melbourne and they are 70 per cent privately insured. In Murray the proportion of people with private health insurance is 40.4 per cent. It is almost half the rate for the equivalent population size in metropolitan Melbourne—only 40.4 per cent can now afford private health insurance in the electorate of Murray. Tragically, there is a much more profound impact of that reduction in private health insurance in a place like the electorate of Murray, only three hours from metropolitan Melbourne. For example, in the small town of Euroa there is a hospital that was once a bush nursing hospital. There are no public beds available in the Euroa hospital. So unless you are privately health insured in that town or in the surrounding districts of Euroa, you cannot access that local hospital. You have to be put in an ambulance and taken to Shepparton, about a 45- to 50-minute drive away, or to Benalla, a similar distance away because there is, in reality, no public bed provision at the Euroa hospital.

You would think that would mean that just about everybody in the Strathbogie Shire—which is the shire where you will find the town of Euroa—would be privately health insured because they know of this circumstance. They know that it is deadly to have a heart attack in Euroa because you are going to have to be accommodated for your emergency help somewhere else. But no—there are very low incomes, and it is a socio-economically disadvantaged area. So the 40.4 per cent of those privately insured extends to the actual shire of Strathbogie.

This is therefore, I think, a significant human rights issue in this country. We have people who are not close to big public hospitals who are therefore substantially disadvantaged in an emergency—a crisis, an accident—on the farm or on the highways. They cannot quickly get access to a place to be treated or, perhaps, to have a longer-term treatment. They might be suffering from cancer and need oncology services. There is a very different business in Australia now between the haves and the have nots. That is not fair, and it is un-Australian.

The measures in this bill are going to make it less affordable and less likely that younger Australians will take out lifetime health cover. How absurd is that? How ridiculous is that in a country which does have an ageing population? In a country that does have significant issues, particularly in regional and rural Australia, with sun-exposure-related cancers, with a lot of respiratory illnesses and with Indigenous communities that have some of the poorest health diagnoses and conditions in the world? I also have in my electorate a significant number of refugees who have very profound issues in terms of their physical and mental health. They will no doubt be less able to afford this private health insurance in the future.

It is not a case in Australia that only the affluent buy private health insurance. That is not the case, and the member for Aston made that very clear in his stating of the statistics, where we have people who are on $50,000 income and less who are doing their best to afford their private health insurance. A family on $50,000 in Australia is not an affluent family, but they are taking out private health insurance because they do not want a long wait for their child or for their elderly parent or one of their family for non-emergency, elective surgery or some health service.

Of course, it is the case that this initiative is all about saving this cash strapped government some funds. We know that there is $1.6 billion already removed from the public hospitals' budgets. We know that is putting many of our public hospitals in an almost economically non-sustainable context. This is a serious time for hospitals and other health services in Australia as they look at the extraordinarily increasing costs of their energy bills, of their wages and when they look at how much it costs to keep themselves in business but they have had to meet a $1.6 billion reduction in budget from this federal government.

Yes, I can understand—but be appalled—by the rationale behind this move to claw back some of the support which in the past has encouraged people to take out lifetime health insurance, but it is a false economy. As you have people who delay seeking a diagnosis of a medical condition and as you have people having to wait in longer queues for things like a hip or a knee replacement, at the end of the day that in fact costs the economy in lost productivity in more serious conditions as those people are not supported in their earliest times of need.

These bills show no respect for the Australians who are quite a distance from the big public health providers in this country. They show no sensitivity or understanding for the real costs now confronting families or younger people as they battle to deal with the impacts of the carbon tax and as they battle to deal with lower employment prospects—particularly in rural and regional Australia.

For example, in my electorate we have just had some 100 orchards no longer able to supply their fruit to the local SPC Ardmona canning factory. While that is an extraordinary catastrophe for those more than 100 orchards, the impacts on their employed workforce, whether permanent or seasonal workers—who include pickers or pruners, packers, those in the transport sector and the more than 800 in the factories themselves—is that they all now face a very unpredictable future in terms of their employment. How are they going to view these new costs and unsure outcomes in terms of private medical insurance? I can tell you that they understand the importance of being privately medically insured, particularly with a lifetime health cover, but they cannot afford it. They certainly deserve to have health services equal to the best available in other parts of the country.

Murray is only 40.4 per cent privately health insured now and, no, that does not compare at all with the 70 per cent and the 80 per cent you will find in metropolitan Melbourne. I think that is going to play out in the statistics of the future when we will see even more disparity between morbidity in country versus metropolitan areas in terms of lifetime expectations and of cancer outcomes, and the numbers of people who are diagnosed earlier with significant heart conditions or renal or diabetic conditions, and we are going to see a very sad unravelling of what has been a country with equitable access to health services in the past.

So I condemn these moves. It is one thing to say that they were not supposed to be on the agenda of this government. They promised they would not meddle with private health insurance. It has happened. This is the third time it has happened. I am concerned that the budget emergency that this government is now in is placing other elements of the Australian community in jeopardy and those elements include the lower socioeconomic status Australians and those who do not have access to the health services that you find in metropolitan Australia.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to rise to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2013 and the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013. This package of measures is part of the Labor Party's relentless and ideologically driven attack on private health insurance. As the cost to the Commonwealth of the health system continues to increase, Labor's curious response is to consistently weaken and erode one of the most effective public policy tools to address and contain that cost explosion, namely, private health insurance and measures to encourage take-up of it.

In the time available to me today, I want to make three points about the measures before the House this afternoon. The first point is that there are good policy reasons to support private health insurance and that is what the coalition has consistently done. Secondly, I want to contrast that with the record of relentless hostility to private health insurance that we have seen from the Labor Party and, thirdly, I want to argue that these two bills are bad policy driven by Labor's agenda of hostility to private health insurance.

Let me turn to the first proposition, that there are good policy reasons to support private health-insurance. The coalition believes that we should encourage every Australian who is able to do so to provide for his or her own medical expenses through taking out private health insurance. The more people who have private health-insurance the better the prospect we have of containing the cost to the budget and to taxpayers of the health system. Let us remind ourselves that this cost is relentlessly expanding and that in 2013-14 it will be $65 billion or some 16 per cent of the entire Commonwealth budget.

The coalition also believes in Australians being able to make choices about their health care and choosing, should they wish to do so and should they wish to be insured to do so, to go, for example, to private hospitals. In my electorate of Bradfield, according to data provided to me by the industry group Private Healthcare Australia, over 96 per cent of my constituents have chosen to have private health insurance. They have taken the decision to incur out of their household budgets expenditure against their future health needs. They are seeking to make sure that they do what they can to provide for the cost of their health needs, rather than simply leaving it to the public purse. I commend them and congratulate them for doing that.

We hear quite regularly the misleading claim from Labor that private health insurance is the preserve of wealthy of Australians. The numbers show otherwise: 5.6 million people with private health insurance have an annual household income of less than $50,000; 3.4 million have an annual household income of less than $35,000.

Unfortunately, what we have consistently seen from the Labor Party is a track record of mismanagement in this very important area of public policy. When Medicare was introduced in 1984 a decline began in the percentage of the population covered by private health insurance. By 1998, only 30.4 per cent of the population was covered by private health insurance, leaving the vast majority of Australians drawing on the publicly funded system and putting it under substantial pressure.

The Howard government inherited a health insurance crisis, and it tackled the crisis with measures that were well designed and which achieved their desired outcome of increasing the proportion of Australians with private health insurance cover—that is, increasing the proportion of people who took upon themselves the burden of funding their own health needs rather than simply leaving it to the public purse. The measures introduced by the Howard government involved a mixture of carrot and stick. The carrot, of course, was the introduction of a tax rebate—the one which has subsequently been weakened by the Rudd-Gillard Labor government.

One of the sticks was that, if you did not take out private health insurance above certain income thresholds, you were required to pay the one per cent Medicare levy surcharge. Another stick was the introduction of the lifetime healthcare loading mechanism. That measure was introduced by the Howard government in 2000. It is designed to encourage Australians to take out private health insurance at an early age. It does this by providing a loading on private health insurance premiums that steps up at the rate of two per cent for every year over the age of 30 at which the individual is when he or she takes out private health insurance. The maximum loading that can be applied is 70 per cent. These measures were successful in achieving their policy objective, and by 2007 private health insurance coverage had climbed to 44.6 per cent of the population.

I turn now to my second proposition, which is the relentless hostility of the Labor Party towards private health insurance. Labor is hostile to private health insurance. Labor is hostile to private hospitals. Labor is hostile to the notion of Australians seeking to rely on their own resources, seeking to make provision for themselves and their families, rather than relying solely and exclusively on the public system. Consistent with that ingrained and deep-rooted hostility to private health insurance that we see on the other side of the chamber, the Labor Party has consistently acted to make private health insurance less attractive to Australians.

We saw the Labor Party act in this way in 2012 when it legislated to impose a more onerous means test governing the payment of the private health insurance rebate. Health minister Plibersek likes to claim that the changes that were introduced in 2012 have had no effect on the proportion of people with private health insurance. There are, however, two powerful responses to this misleading claim and both of them are based on data and evidence from the government's own regulator, the Private Health Insurance Administration Council, known as PHIAC.

The first response is that many Australians responded to the changes introduced in 2012 by prepaying at the old rates before 30 June 2012; hence deferring the true effect of the changes introduced last year. In fact, PHIAC reported $1.2 billion of prepayments in the June quarter of 2012 as Australians sought to defer the resulting premium increases. Indeed, many policyholders prepaid for 12 months or more. The second piece of evidence is that it is clear that many Australians have responded to the reduction in the scope of the rebate by reducing the level of the health insurance cover they have taken out. Indeed, PHIAC has found that, in the five years to 2012, 'exclusions and restrictions have become much more prevalent' and the increased use of exclusions, it goes on to note, 'may work against the policy objective of private health insurance in easing the burden on public hospitals'.

In the lead-up to the 2007 election, of course, the Labor Party made every effort to conceal its ideological hostility towards private health insurance, and so effective was its concealment that it made a series of commitments which it has since systematically failed to live up to. For example, in the lead-up to the 2007 election, the then shadow health minister and member for Gellibrand had this to say:

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

Then opposition leader Kevin Rudd, just before the 2007 election, made this written commitment in a letter to the industry peak body:

Both my Shadow Minister for Health, Nicola Roxon, and I have made clear on many occasions this year that Federal Labor is committed to retaining the existing private health insurance rebates, including the 30 per cent general rebate and the 35 and 40 per cent rebates for older Australians.

As the historical record shows, these specific commitments were abandoned last year when the government, after previous failed attempts, passed legislation to break these commitments and impose significantly more onerous means tests on the availability of the private health insurance rebates.

I turn to my third proposition, which is that the two bills before the House this afternoon are bad policy driven by Labor's agenda of relentless hostility to private health insurance, because the measures contained within both of these bills are designed to erode the value of the private health insurance rebate to Australians.

The first bill before us is the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill, and its effect is to restrict the rebate so that it is not paid on the Lifetime Health Cover loading component. As the arrangements currently stand, if a rebate on private health insurance is payable to an individual, then the rebate is calculated on the total premium, including any Lifetime Health Cover loading component. What the government announced in the Mid-Year Economic and Fiscal Outlook was a change to take effect from 1 July this year designed to remove the rebate from the loading component, therefore significantly reducing the value of the rebate. Now, we are told that this is a savings measure, but the savings need to be weighed up against the likely impact on health expenditure of a reduction in the number of people with private health insurance and hence the imposition of a greater load on the public hospital system.

The measures in this bill bring with them some very nasty side-effects. They add further substantial complexity to the private health insurance system, and it is estimated that they will cause a further increase in premiums for 1.1 million Australians. Indeed, they will be a disproportionate increase in premiums for low-income earners because the means-testing changes which have already been implemented have already reduced and, in some cases, removed the rebate for higher income earners. It is estimated that changes to the Lifetime Health Cover arrangements proposed in this bill will increase premiums by up to an amount as high as 27.5 per cent from 1 July 2013 and, troublingly, this is likely to have a direct impact on lower income Australians who have or wish to have private health insurance.

It will also materially increase the administrative burden on private health insurance. It leaves a very short time frame in which to change systems so that the new arrangements are in place by 1 July 2013. The means-testing changes have already created around 12 different pricing structures for premiums, and changes to the Lifetime Health Cover loading will further increase the administrative burden on private health insurers. That is why the coalition has indicated its opposition to the bill.

The second bill, the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013, will have the effect of reducing the amount paid in the private health insurance rebate, because, rather than the rebate being calculated on the actual premium paid by Australians each year, it will now be calculated based on a lower amount called the base premium. The base premium will be indexed annually by whichever is lower—the CPI or the actual increase in premiums imposed by insurers. After a few years, what this is likely to mean is that the base premium will be considerably lower than the actual premium. In turn, a rebate calculated based on the base premium will be less valuable over time in relation to the true cost incurred by the holder of the policy.

The minister in her second reading speech argued that this is necessary because the number of people with private health insurance has grown and the rebate is costing too much. Again I make the point that if the minister were really concerned with minimising cost to the Commonwealth over the long term she would be pleased to see the growth in private health insurance, because the more people who have such insurance the more cost pressure is taken off the public hospital system.

As we have made clear, the coalition does not like the measures contained in this bill at all. But we are also conscious that, thanks to the sustained fiscal mismanagement of the government, Australia, or the federal government, is facing a budget emergency. We will inherit a fiscal position, should the coalition come to government at the next election, in which gross debt is heading towards $400 billion. On that basis, we are reluctantly not opposing this measure—because of the urgent need to return the budget to surplus—but we do reiterate that we do not like this attack on private health insurance and we do not like the attack contained in the other bill on private health insurance. It has always been the coalition's view that there are good policy reasons to support private health insurance. That is what the coalition has consistently done. I conclude by once again congratulating my constituents, who, in almost all cases, choose to pay for private health insurance and take responsibility for their own healthcare expenditures.

Josh Frydenberg (Kooyong, Liberal Party) Share this | Link to this | Hansard source

I rise to follow a very good speech by my colleague and friend the member for Bradfield on a very important topic—namely, the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 and the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013. Both bills have come before this House because this government has a budget crisis—indeed, a budget emergency. They are approaching $300 billion of debt and have overseen the five largest budget deficits in Australia's history. So they are having to embark on broken promises and to claw back money from those Australians who have taken the decision themselves, based on personal responsibility and their freedom to choose, to undertake private health insurance. As a result, all premiums for all Australians who undertake private health cover will go up. Not only will a private health insurance rebate no longer cover the loading component of lifetime health cover but it will also see premiums for those currently receiving the rebate go up. This will hit many people in my electorate of Kooyong.

Based on figures provided by Private Healthcare Australia, the percentage of voters in my electorate with private health insurance is 84.5 per cent. That is over 105,000 persons in my electorate, including 25,000 singles. That is a lot of people in my electorate and that is repeated across the country, because more than 12 million Australians have taken out private health cover.

It is a deep shame that the Labor Party has undertaken these measures, because not only did they promise before previous elections that they would never touch private health insurance but the measures will increase the cost of living for all Australians and will increase the burden on our public hospitals, which are already suffering from Labor government cuts. We on this side of the House have a different philosophy to those on the other side. Politics is not just about management but it is actually about ideas. On our side of the House we believe in an individual's freedom to choose. We believe in an individual taking personal responsibility for their decisions. In fact, in a speech in Camberwell Town Hall back in 1946, the founder of the Liberal Party and a previous member for Kooyong, Sir Robert Menzies, delivered an important speech that kick-started the federal election campaign. In that speech he said:

We need to return to politics as a clash of principles and to get away from the notion that it is a clash only of warring personalities.

There is no more important issue than the private health sector, the private education sector and an individual's freedom to choose. That is why we on this side of the House will always defend the private health sector and allow an individual the right to choose.

In Australia, nearly 12½ million Australians have made the decision to take out private health insurance. This increased substantially during the time of the Howard government—indeed, it increased 75 per cent from just over six million Australians to 10.7 million Australians. That was a result of inspired policies that the Howard government undertook: the Medicare levy surcharge, in 1997; the 30 per cent rebate, in 1999; the lifetime health cover policy, in 2000. As a result, we now have a flourishing private health sector which is under threat from Labor's cuts.

Nearly 600 private hospitals in Australia provide nearly 40 per cent of the services to those who go to hospital. Nearly two out of every three elective surgeries are conducted within private hospitals. Private hospitals play an important role in our community in alleviating the burden on the public system. The Howard government not only had a very proud record of increasing its support for the private health system but also supported the public system. Spending on public hospitals increased 110 per cent between 1996 and 2007, the period when John Howard was in office. Let me repeat these facts: we increased the number of people on private health insurance by 75 per cent and at the same time we increased the amount spent on public hospitals by 110 per cent. Contrast this with Labor's record, where in MYEFO last year they ripped more than $1 billion out of Australia's public hospital system. In my state of Victoria some of that money was ripped out retrospectively. We saw that when beds were closed and elective surgery was cancelled. Then the Minister for Health, Tanya Plibersek, did a public backflip because she saw the pain this was creating for thousands of Victorians. We know that this government has introduced the means test to private health insurance, which companies like Deloitte had estimated would cause more than 500,000 Australians to drop out of private health insurance or diminish their levels of cover.

We have not seen the full impact of the means-testing of the rebate, because more than $1 billion was spent in Australians prepaying for their private health insurance. This is a very important fact. They prepaid for 12 months or more, and as a consequence we have not seen flow-through of the impact of the higher premiums that have already resulted and will result from the government's means-testing of the private health insurance rebate.

There is one significant mistaken belief that those on the other side of the House have about private health insurance. It is part of their class warfare. They think that every Australian who has private health insurance is a rich Australian. I tell you that they are not rich. In fact, they are aspirational and take responsibility for their own health care, just as many of them take responsibility for the education of their children. But you are attacking them with your means-testing of the rebate and with your new measures affecting the loading and so forth under these bills.

There are over 5½ million Australians with an annual household income under $50,000 who have private health insurance, and nearly 3½ million Australians who have less than $35,000 as their annual household income who have private health insurance. These people are not rich but have taken the conscious decision to take out private health care because they want to make that choice for themselves and their families.

We have learnt in the last five years what a bad government can do to damage the Australian economy. The Australian people have learnt never to trust the words of another Labor government, and they will find this out on 14 September. But what we are debating now about private health insurance brings into focus the commitments by senior members of those opposite to retain the private health insurance rebate in its form. The current Prime Minister, Julia Gillard, when she was shadow minister for health back in 2004, said:

I grow tired of saying this—Labor is committed to the 30 per cent private health insurance rebate.

Well, we now know that that is not true. Then Julia Gillard, in a letter to the editor of The Weekend Australian on 15 October 2005, said:

For all Australians who wanted to have private health insurance, the private health insurance rebate would have remained under a Labor government. I gave an iron-clad guarantee of that during the election.

The difference between Tony "rock solid, iron-clad" Abbott and me is that when I make an "iron-clad commitment", I actually intend on keeping it.

That is laughable. That is absolutely laughable, because the now Prime Minister was comparing herself to the now Leader of the Opposition, saying that you cannot believe him but you can believe her. We have seen not only with the carbon tax but now with private health insurance that the government's word cannot be taken at face value. Nicola Roxon, the shadow minister for health, who became the Minister for Health and Ageing, said this on 23 September 2007 on Meet the Press:

We've committed to it.

Namely, the private health insurance rebate. She said:

We've committed to the 30%. We've committed to the 35% and 40% for older Australians. It's similar to the safety net. We know that many people rely heavily on the assistance that is now provided and would not be able to have private health insurance if that rebate wasn't paid. And lifetime health cover and others that go with it, we are committed to those. We understand that Australia now has a mixed health system, both private and public, and we need them both to be strong in order for the community to be able to get the services.

Well, I'll be damned. That was the former minister for health committing to the private health insurance rebate as we introduced it.

Now we have had backflip after backflip, not only cutting more than a billion dollars out of the public health system but ripping money out of the private system, when we know that the private system is responsible for dealing with 40 per cent of the patients in Australia and two out of every three elective surgery operations. That is the role of the private healthcare system, and this government is ripping the guts out of it. Nicola Roxon, in a media release on 26 September 2007, said:

On many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all of the existing Private Health Insurance rebates …

We know that is not true. And Kevin Rudd in 2008, as Prime Minister, in a press conference, said:

The Private Health Insurance Rebate policy remains unchanged and will remain unchanged.

This is laughable. This is laughable because this government has destroyed our private health system, has cut our public health funding, has not kept its promises on the Medicare Chronic Dental Disease Scheme, has slowed down our Pharmaceutical Benefits Scheme and the subsidies that are provided under that and has increased the number of bureaucracies—at last count, nearly 12 in the health sector alone, costing more than a billion dollars—and now we have the private health insurance debacle.

I call it a debacle because this government promised time and time again—from Kevin Rudd to Nicola Roxon to today's Prime Minister, Julia Gillard—to keep the private health insurance rebate as it was. These bills, which this government has brought before the parliament in a rushed manner, without proper consultation and deliberation, are going to lead to a substantial increase in premiums—up to 27 per cent—for more than 1 million Australians. It is going to lead to 12 different price mechanisms for private health insurance. It is going to increase complexity.

I finish where I started. For the coalition, Liberals and Nationals, this is not just a debate about the services that are provided to ordinary Australians; it is also a debate about the philosophy of our party. It is a debate about why we are in this place to start with and about what differentiates our side from theirs. The late, great Margaret Thatcher, whom we recently lost, talked about private health insurance. She said:

I, along with something like 5 million other people, insure to enable me to go to hospital on the day I want, at the time I want, and with a doctor I want. For me, that is absolutely vital

… … …

Like most people, I pay my dues to the National Health Service; I do not add to the queue, and if I said, 'Look, because I cannot come when you want me, I must come when I want to' you would accuse me of jumping the queue. I exercise my right as a free citizen to spend my own money in my own way, so that I can go in on the day, at the time, with the doctor I choose and get out fast.

We will always support the private health system because we believe that it allows an individual to have the right to choose in a society which stands, as we will always stand, for individual freedom.

Natasha Griggs (Solomon, Country Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012. While this bill is part of a cognate debate with the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013, due to the Gillard Labor government once again rushing legislation through the House without allowing the coalition appropriate time to consider the bill through the normal processes, I will be focusing much of my contribution on the first bill: the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill.

Those on the other side just do not understand how important it is to have a strong private health insurance system in order to support a dynamic public system. The coalition recognises the importance of planning for the long term to meet the challenges which will come with an ageing population. On this side of the House we recognise the importance of encouraging the growth of the private health insurance system, which will help reduce the pressures the ageing population will place on our public health system.

The Howard government left office with a legacy of encouraging uptake of private health insurance and of supporting those Australians who wish to take out private health insurance for their families while still supporting a vibrant public health system. The Gillard Labor government, on the other hand, continues to mislead the Australian people. Before the election they supported private health insurance; now, after the election, they are doing all they can to discourage the uptake of private health cover. In The Courier Mailon 23 September 2004, the Prime Minister, Julia Gillard, who was then the opposition spokesperson for health said: 'Labor is committed to the maintenance of this rebate'. Yet only the members of the coalition stand here today in this chamber ready to defend the private health insurance rebate. Again it is left to this side of the House to defend a promise made by the Gillard Labor government at the last election.

All the government's broken promises are creating huge stress and anxiety among Darwin and Palmerston residents. As I have discussions with mums and dads and grandparents, I am told over and over again that they are so worried for their children's futures that they just do not know how they can cope. They talk about the chaos and the instability wreaking havoc inside the Gillard Labor government and the uncertainty it is creating in their lives.

On the ground throughout Solomon I hear people's huge concerns about the introduction of the carbon tax—the carbon tax which we were told we were never going to have; another broken promise—and about the failure to deliver the surplus that Treasurer Swan promised would come hell or high water. But the people of Solomon cannot handle any more policy on the run. They have, quiet frankly, had enough. Yet today we are in this place again discussing another Gillard Labor government broken promise. This is now the second time the Gillard Labor government has reneged on their commitment not to cut the private health insurance rebate. This is just another blow to the already struggling, hardworking families of Darwin and Palmerston.

In my electorate, we have a huge defence population and, according to the 2011 census, a median age of 32, while Australia-wide it is 37. Yet, according to Private Healthcare Australia, as of 1 January 2013 over 53 per cent of my constituents had some sort of private health insurance. As we know, back in July 2000, Lifetime Health Cover was introduced by the Howard government, at a rate of two per cent per year loading on insurance premiums applied to individuals over the age of 30 when they took up private health insurance; it was capped at 70 per cent and removed after 10 years of continuous cover. This initiative was introduced to promote the uptake of private health insurance at a young age and to encourage individuals to retain their cover over their lifetime. I certainly did that. The Howard government understood, as the coalition continues to do today, the challenges of an ageing population and that supporting the growth of the private health system would reduce the pressure on an already strained public health system.

Currently, the private health insurance rebate is paid on the total of the premium and includes the Lifetime Health Cover loading. The legislation being put forward today takes away the part of the rebate which covers the Lifetime Health Cover loading. This legislation will also cease the incentive payment schemes which allow the direct claiming of the private health insurance rebate through the Department of Health services. It is estimated that these new measures will see a budgetary saving of around $386.3 million. This comes at the expense of the mums and dads throughout my electorate in Darwin and Palmerston. It has been estimated that the premiums will increase by up to 27.5 per cent from 1 July 2013 under these new measures.

Constituents across Solomon tell me they just cannot continue to endure the financial pain that this Gillard Labor government is inflicting on them. Some of them are struggling to keep their heads above water. Since the changes to the private health insurance rebate were announced in the latter part of last year, I have been contacted by a number of constituents from across the electorate who are opposed to these changes, and I would like to share some of those stories with you. Yesterday, I received an email from Robert Milliken of Fannie Bay, who raised his deep concern that these changes would force prices up for private health insurance. Robert told me how he was worried that these changes would be 'yet another legacy from a failed Labor government'. Kelly Hawes of Bellamack emailed me, deeply concerned about these changes. Kelly said it was becoming too 'expensive for me to be insured'. Shirley Andrews of Malak emailed me to say that the 'private health insurance rebate is of vital importance to allow me to provide health cover for my family' and that 'because of the changes … I may well have to consider dropping my cover'. Kathrine Carver of Alawa and Anita Goodgame of Parap contacted me to say that they fear the changes to the private health insurance rebate will mean that private health insurance for their families would be out of their reach. Then Julie Donohue of Wanguri emailed me to say that she was worried that these new changes would mean it was no longer affordable for her family to have cover. I was contacted by Judith Pouliot of Stuart Park who was upset that 'these new proposed changes will hurt Australians like me'.

Darrel Holmes of Leanyer has contacted me several times to raise his concerns about the proposed changes. In March, he told me how he had recently undergone back surgery at a private hospital in Sydney—a procedure that has an extended waiting period in the public system. If Darrel had not had private cover and had been forced to be on the public waiting list, the wait would have been too long, causing permanent damage and forcing him to be reliant on a wheelchair for the rest of his life. For Darrel, the public system was just not an option. He sent me another email only last weekend telling me how he feared these changes because it was likely he would have to 'drop out or downgrade' his insurance.

It is not fair or reasonable to expect that hardworking people of Darwin and Palmerston live their life with such uncertainty. The Gillard Labor government have overindulged, broken their surplus commitment and are now cutting the rebates to hardworking families that provide them with the support they need to gain access to frontline health services. This comes after we have seen the means testing of the private health insurance rebate, saving $2.8 billion. On 24 February 2009 the former health minister and member for Gellibrand, Nicola Roxon, said, 'The government is firmly committed to retaining the existing private health insurance rebate.' And yet they have broken that commitment, not once but twice: one rebate, two broken promises. It is not good enough.

I could not talk about health without mentioning my local hospital, the Royal Darwin Hospital, which services the residents of Darwin and Palmerston. According to the Gillard Labor government's own MyHospitals website, it treated over 50,000 patients between June 2010 and June 2011. This is a tremendous achievement and it is very much due to the hardworking staff of the hospital. However, Royal Darwin Hospital is strained to capacity. According to the MyHospitals website, the Gillard Labor government set its own target for 2011-12, the final full financial year of the former Territory Labor government, of 69 per cent of all patients to be in and out of the emergency departments of Northern Territory hospitals within four hours. Sadly, only 54 per cent of patients at Royal Darwin Hospital departed the emergency department in four hours. Again according to the government's figures, the median wait time for general surgery is 31 days nationally and at the Royal Darwin Hospital it is 49 days. So the Gillard Labor government's own figures show that the Territory health system is under pressure, yet it is ignoring these indicators and putting more pressure on the system. It can be argued that the Darwin Private Hospital alleviates a lot of the pressure on the Royal Darwin Hospital because the two hospitals work closely together and because 50 per cent of the people in my electorate have private health insurance. The private hospital has around 100 beds, which is a third of the capacity of the Royal Darwin Hospital, and it is significantly reducing pressure on the Territory health system, as I said.

According to the Private Health Insurance Administration Council, in the five years to 2012 private health insurance has seen 'exclusions and restrictions … becoming more prevalent', which is what those constituents of mine are telling me they are having to look at. They have also found that the increased exclusions 'may work against the policy objective of private health insurance easing the burdens on public hospitals', and that is my fear. The Private Health Insurance Administration Council also reported $1.2 billion worth of prepayments in the June quarter last year as people tried to defer the pain of the Gillard Labor government's cuts causing premium increases. That means that we really have not seen the full implications yet of the prepayments.

We have seen slashes to frontline services through the cuts to the private health insurance rebate, public hospitals and the closure of the Chronic Disease Dental Scheme. This bill will only further add complexity to the private health insurance industry. The Gillard Labor government's means-testing measures last year have led to the establishment of 12 pricing structures for private health premiums.

These measures introduced by the Gillard Labor government today are forcing the private health insurance sector back decades. Private health insurance companies are seeing dramatic increases in their administrative costs to deal with the measures—only escalating premiums further. The Howard government, as previously said, cemented the growth of the private health sector. In fact, under the previous coalition government, the number of people with private health insurance had increased by over 75 per cent.

I finish by saying that along with my coalition colleagues we understand on this side of the House that communities are far better off when the public and private health systems work hand in hand. Labor is not a friend of private health insurance. It consistently has tried to make private health insurance unattractive to Australians and has broken promise after promise on private health insurance. Unfortunately, because of Labor's reckless spending, its poor economic management and its incompetence, there is now a budget emergency. This government is saying these changes are savings measures.

We on this side of the House do not like these changes one little bit. They go against our DNA. Unlike Labor, we are strong supporters of private health insurance. Those on the other side, as the member for Kooyong said, are engaging in class warfare and think that if you have private health insurance you must be rich. My electorate is not rich—but 54 per cent of those people have private health insurance. They are just hardworking mums and dads who want a choice, who want to take responsibility for themselves.

It is outrageous that Labor thinks it a crime to be aspirational or to take responsibility for yourself. Labor's attack on private health insurance is not fair. This government cannot be trusted. I hope that on 14 September the people in my electorate see what is happening and vote me back in so that I can be a member of a, hopefully, Abbott-led government. We will not let this sort of stuff happen.

Karen Andrews (McPherson, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 and the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013. I support private health insurance and the coalition supports private health insurance. Over a year ago this House debated changes to the private health insurance rebate, a rebate that benefited millions of Australians. For years, Labor denied that they would tamper with the 30 per cent rebate, yet last year they imposed means testing on a program that affects just over 50 per cent of Australians.

The full effect of Labor's changes to the private health insurance rebate are yet to be felt. This is because, as the Private Health Insurance Administration Council has reported, $1.2 billion in prepayments were made in the June quarter of last year, with many policyholders prepaying for 12 months or more to defer the resulting premium increases caused by the changes. We also know that the means testing has resulted in 12 pricing structures for premiums and has certainly made the system far more complicated. These changes were made even though figures show that the private health insurance rebate saw an additional eight million patients treated in private hospitals over the past 10 years, saving taxpayers $26 billion because of the pressure it relieved from the public health system.

This is an important function of private health insurance and therefore helps to ensure the overall wellbeing of our health system. To highlight its importance, it needs to be remembered that in Australia over 10.6 million people have private hospital cover. In my electorate of McPherson alone there are over 72,000 people who have private-health cover—an astonishing number. These are strong numbers which demonstrate that the private health sector does some fairly heavy lifting to reduce demand on the public sector.

When considering who has private health insurance in Australia, it is encouraging to note that 5.6 million Australians with private health insurance have an annual household income of less than $50,000 whilst 3.4 million have an annual income under $35,000. Clearly, private health insurance is not a scheme just for the wealthy. Many Australians are making the choice to take out private health insurance. The private health insurance rebate was an important step in helping these Australians protect themselves when times get tough, as was lifetime health cover, the central aspect of one of the bills being debated today.

The bill being debated will further modify the private health insurance rebate so that it will restrict the rebate from being payable on the lifetime health cover loading that is attached to a person's private health insurance premium. This measure was announced in the 2012-13 Mid-Year Economic and Fiscal Outlook and if this legislation is passed by the parliament it is set to come into effect on 1 July this year. Lifetime health cover was first introduced by the Howard government and came into effect on 1 July 2000 as part of reforms to private health insurance. As a result of these reforms, private health coverage increased dramatically from 6.1 million Australians to over 10.7 million, a 75 per cent increase. As it currently stands, lifetime health cover places a two per cent loading on a person's premium for every year that an individual is over the age of 30 when they decide to take out private health cover. For example, if a person is 40 when they take out cover they would pay a 20 per cent loading on top of their premium. However, this bill will restrict the private health insurance rebate, which, as I have mentioned, has now been means tested from being payable on this component. Reports indicate that premiums may increase by up to 27 per cent on 1 July as a result of these changes. This may well force some individuals and families to reduce or stop their level of cover for private health insurance. Only after 10 years of an individual holding hospital cover will the lifetime health cover component of a person's premium be removed.

There would be a sizeable number of policyholders in the community who have been paying their premiums, including the lifetime health cover component, as required for a number of years and who have been assisted in their payments by the rebate. However, if this bill passes through the parliament these policyholders will now find themselves having to pay for the full cost of the loading without any assistance from the rebate.

When these new changes come into effect it would be disappointing, at the very least, if they resulted in policyholders being forced to make the choice between continuing their private health insurance or having to opt out so that they cater for the other competing and rising costs that they face such as groceries, fuel and electricity. Implementing such changes to lifetime health coverage on the tight time frame being contemplated today will increase the administrative burden on private health insurers, who may have barely a month to make sure their systems are in order.

Encouraging people to take up private health insurance, as I mentioned previously, is important to help ease the burden on our public health system. Not only does this help patients in getting the medical treatment they need but it also assists our doctors, nurses and allied health professionals who do a fantastic job across the country but who are under workload pressures in many instances. Nonetheless, the Private Health Insurance Administration Council has noted that for the five years leading to 2012 exclusions and restrictions have become much more prevalent in private health insurance, with such increased use of exclusions perhaps working against decreasing the burden on public hospitals. If such changes as those being discussed today further affect the number of people taking out policies this may also work contrary to alleviating the pressure on the public system.

The gravity attached to easing the burden off the public system becomes more apparent when taking into consideration that $1.6 billion had been cut out of hospital funding in last year's Mid-Year Economic and Fiscal Outlook, including retrospective cuts to public hospital funding that had already been spent and allocated in 2011-12 and 2012-13. These cuts have already resulted in the closure of beds and operating theatres and in delays to surgery.

In an effort to try and salvage its budgetary position the government has been focusing its scalpels on areas which, when cut, will detrimentally affect millions of Australians, rather than refocusing the scalpel towards its wasteful spending, which has resulted in debt reaching over a quarter of a trillion dollars and another consecutive deficit. I will just note that one such program that got caught by the government's scalpel was the Medicare Chronic Disease Dental Scheme. Taking away that scheme meant the loss of a Howard government legacy, which had assisted over a million patients since 2007, and the introduction of a replacement program that will leave some of the most vulnerable dental patients in this country with a year-long plus wait to get the assistance that they need.

Private health insurance is crucial to the preservation of our health system. Further strengthening it can only be a good thing. I fear that the changes to lifetime health cover may not achieve that objective, and will make the system more complex and expensive for Australians looking to do what is in the best interests of their health and wellbeing.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I welcome the opportunity to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2013. Lifetime health cover loading legislation epitomises why so many Australians are turning their backs on this government. If members opposite are concerned why they have lost the trust of millions of Australians; if members opposite are concerned and would like an insight into why Australians believe this country is going down the wrong track; or if members opposite are seeking a snapshot of why Australians believe this government is out of touch, then I would suggest that those members should cast their eye over this lifetime health cover loading legislation we have before us today.

What lifetime health cover loading legislation represents is just another broken promise by this federal Labor government. On the back of the Prime Minister's broken promises on carbon tax and delivering a surplus, we now have another broken promise from a Prime Minister and a government which believe they have a mandate to say one thing and do the exact opposite. Another broken promise from a Prime Minister and a government which treat Australians as real mugs. Another broken promise from a Prime Minister and a government which will do anything to hold onto power and will make ordinary Australians pay the price for the government's own waste and mismanagement.

I say this because the government had claimed prior to both the 2007 and 2010 elections that they would retain the private health insurance rebate in its totality. But the reality is that the lifetime health cover legislation we are talking about today is just another step in the government's commitment to dismantle the private health insurance rebate. Last year, we saw the government break its promise to retain the rebate when it introduced means testing for private health insurance. After wasting billions of dollars on border protection, after wasting billions on overpriced school halls and blowing billions on installing pink batts and then taking them out again, the government targeted the wallets of Australians with private health insurance.

Through the introduction of means testing the private health insurance rebate, the government has effectively dumped the principle of universal health care, which is based on the same Medicare rebate going to everyone and the same private health insurance rebate also being available to everyone. With the stroke of a pen, Labor abandoned its pre-election commitment and deserted 12 million Australians who have private health insurance.

I would like to take a few moments to remind the members opposite why this decision was a breach of trust. In the lead-up to both the 2007 and 2010 elections various senior members from this government were questioned about their commitment to the private health insurance rebate. Let me remind the House what the response to those questions was. Just a few weeks before the 2007 election, the member for Gellibrand and then shadow minister for health was asked a question on Meet the Press on the Ten Network in September 2007, and this is what she said. Steve Lewis from News Limited asked:

Let's move to another integral part of the health system, the private health rebate, the 30% rebate. Labor has said, "Yes, we will keep it," but you have not said whether you will keep it in total. Can you say now that Labor, if elected, will maintain all of the ancillary measures that encompass the private health rebate?

NICOLA ROXON: Yes, I can. We've committed to it.

I would just like to repeat that. She said:

Yes, I can. We've committed to it.

After the 2007 election, Prime Minister Rudd was further questioned in 2008, and this is what he said:

The Private Health Insurance Rebate policy remains unchanged and will remain unchanged.

In 2009, the member for Gellibrand was the federal Minister for Health and Ageing and was again asked about the government's commitment to private health insurance rebates. This is what she said:

The Government is firmly committed to retaining the existing private health insurance rebates …

And of course the current Prime Minister, Julia Gillard, when she was the shadow minister for health, said the following:

YOUR correspondent … should have no concern that Labor will "erode" or abolish the 30 per cent government rebate for private health insurance. Labor is committed to the maintenance of this rebate and I have given an ironclad guarantee—

I think that the member for Denison had an ironclad guarantee on gambling reform too—

of that on a number of occasions.

Today, in 2013, we have now seen federal Labor under the leadership of this Prime Minister wind back their commitment to the private health insurance rebate to the tune of some $4 billion. The rebate has become the government's cash cow to bankroll their own waste and their own mismanagement.

It is now very clear to all Australians that last year's introduction of means-testing the private health insurance rebate was simply the first step in winding back the subsidy. The government ignores the fact that everyone with a private health insurance rebate will pay more for their private health insurance because of the means-testing. While there are a range of views on what the eventual impact will be, Deloitte's study highlights how federal Labor simply does not understand the importance of private health insurance. The study revealed that having higher premiums for higher income earners, who are generally younger and healthier, will eventually cause around six million Australians to drop out or downgrade their private cover. It is estimated that this will raise premiums for everyone else by around 10 per cent. That is a 10 per cent rise for 3.4 million privately insured Australians earning under $35,000 a year, in addition to the 30 per cent increase for higher income earners. These people are already suffering from rises in the cost of living as a result of the carbon tax and a host of other new levies, fees and charges which this government has imposed on both businesses and consumers. It is beyond belief that the government, which constantly claims to be standing up for the worker, would milk the savings of low-income earners who are easing the pressure on our public health system by taking out their own private health insurance.

We must remember this important point: this lifetime health cover loading legislation is a further attack on private health insurance, which has an impact on health funding in general, because, in subsidising 30 per cent of private health costs, the government avoids having to subsidise nearer 100 per cent of public health costs. We all know that the public health system is already under extreme pressure. These private health insurance cuts will put more pressure on public hospitals, which are struggling under the $1.6 billion cuts to funding under Labor's MYEFO. These cuts have caused the closure of public hospital beds and operating theatres and delays to elective surgery.

As more Australians drop or downgrade their private cover because of the government's dismantling of the rebate, the pressure on the hospitals and the broader health system will only increase. The Deloitte study I referred to earlier showed that as a result of the cuts already made—that is, cuts that do not include the legislation we are debating today—a reduction in the number of Australians with private health insurance will lead to a further 845,000 patients over the next five years seeking treatment in public hospitals. Paying for these additional procedures will cost the states an estimated $3.8 billion a year.

It is against this backdrop of means-testing the rebate that the government has now introduced this legislation which I am speaking about today. If passed, the legislation will restrict the private health insurance rebate being paid on the part of the premium with a lifetime health cover loading, or LHC loading. The lifetime health cover loading is applied at a rate of two per cent for every year that an individual is over the age of 30 when they take out hospital cover. Currently the rebate is paid on the total premium, but the government intends to remove the rebate from any LHC loading. With the government's budget in complete disarray, Labor announced in last year's MYEFO that it would dip its hand into the back pockets of those with private health insurance to try and prop up their disastrous budget balance sheet. The government also announced in MYEFO that the government's contribution to the rebate would be capped and indexed to the CPI or premium increases—whichever is the less.

All these announcements further undermine the rebate offered to those who pay for private health insurance. It is forecast that withdrawing the rebate on the LHC loading will see 1.1 million Australians pay more for their private health insurance. Many of those who will be hardest hit will be low-income earners. High-income earners will not be hit, because they lost their rebate when the means testing was introduced.

As the shadow minister for health and the member for Dickson has pointed out to me, the government's own body, the Private Health Insurance Administration Council, has expressed reservations about the changes the federal government is about to make to this rebate. After acknowledging the exclusions and the restrictions of the rebate had become 'more prevalent', the PHIAC said the increase in exclusions may 'work against the policy objective of private health insurance in easing the burden on public hospitals'. Whilst that might be stating the obvious, it just confirms how desperate this government has become. A number of constituents in my electorate have contacted me concerned about what federal Labor is doing to the health insurance rebate system. This is what one constituent said in an email with regard to the lifetime health cover loading:

I have heard that more changes might soon be made to the Private Health Insurance Rebate, which will make it even more expensive for me to be insured.

I am emailing you to ask you to vote against these changes, as I am finding the increases in all the various costs which I now pay are making it considerably more difficult to budget.

If I do give up my Health Insurance I will need to go to a public hospital if I get sick, where the waiting lists are too long. Please do not vote for the legislation.

This is an insight from just one Australian, out of the millions of Australians who will be impacted by Labor's ongoing dismantling of the private health insurance rebate system through this lifetime health cover loading legislation.

In conclusion, just like the carbon tax, this legislation is a breach of trust with all Australians. It is a further reminder that when it comes to federal Labor you simply cannot trust them to do what they say they are going to do. This mistrust has Australians now living in a land of uncertainty, which is sapping the confidence of families and businesses alike. As I said at the beginning of the speech, if the members opposite want to know why Australians are completely disillusioned with this government, they need look no further than this legislation. It is bad for Australians with private health insurance, it undermines our system of universal health care and it betrays the trust which is so important to the self-esteem of the nation.

Louise Markus (Macquarie, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 and the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013, presented together in this debate. Before examining the serious issues inherent in the provisions of the bills before the House today, it is important to reflect on the significant factors that have shaped the development of lifetime health cover loading to its current regulatory and legislative form.

LHC is a loading on private health insurance premiums that is applied at a rate of two per cent for every year that an individual is over the age of 30 when they take out hospital cover. A cap of 70 per cent is applied. LHC was an initiative of the Howard government as part of reforms, which came into effect in 2000, that significantly increased private health insurance coverage. It aimed to provide concessions to support hardworking Australians who chose to take out private health insurance for themselves and their families. The latest changes to private health insurance that this bill enacts were announced in MYEFO 2012-13 and the proposed changes to lifetime health cover are due to take effect on 1 July this year. These changes are in spite of many years of promises and undertakings made by the Prime Minister and Labor politicians that they want not to seek to change the private health insurance rebate provisions.

The real cost impact of the proposed and developed changes is significant. Through MYEFO and means-testing changes, Labor's broken promise on private health insurance amounts to nearly $4 billion: $386 million through changes to LHC contained in this bill, $700 million by limiting the government contribution to the rebate by a maximum of CPI as announced also in MYEFO and $2.8 billion for means testing. I am particularly concerned by the misrepresentative rhetoric that this government has employed whilst trying to both force through and justify the changes to the rebate system.

Labor is wrong to imply that private health insurance is for the wealthy. Some 10.6 million Australians have private insurance, whilst 5.6 million people with private health insurance have an annual household income of less than $50,000 and 3.4 million have an annual household income of less than $35,000. In the electorate of Macquarie close to 60 per cent of all residents have private health insurance. In large sections of both the Blue Mountains and the Hawkesbury regions household incomes are either at or below the national average. To claim therefore, as this government is attempting to, that private health insurance is for the rich or wealthy is totally absurd.

I am also at a loss to understand why the Prime Minister and her colleagues think it is at all advisable or even morally defensible to place even greater pressure on families who are choosing to ease the pressure on public hospitals and provide choice in health for their families, to place additional pressure on those who are already struggling to cover the basic costs of living. The government's changes to private health insurance are already having a negative impact. The government's own Private Health Insurance Administration Council, the PHIAC, has found in the five years to 2012 that 'exclusions and restrictions have become much more prevalent' and that the increased use of exclusions 'may work against the policy objective of private health insurance in easing the burden on public hospitals'.

The private health insurance cuts will put more pressure on public hospitals, which are already struggling under the $1.6 billion cut to hospital funding in Labor's MYEFO. This includes retrospective cuts to public hospital funding that has already been spent and allocated in 2011-12 and 2012-13. It has caused the closure of some public hospital beds, operating theatres and delays to elective surgery. It seems extraordinary, therefore, that this government can seek to argue that, by making private health insurance less affordable, public hospitals will be able to provide a better service. This assertion again is simply absurd.

The full impact of Labor's means-testing changes are yet to be felt. The PHIAC reported $1.2 billion in repayments in the June quarter as people tried to defer the resulting premium increases. Many policyholders prepaid for 12 months or more, delaying the pain of Labor's cuts. Federal Labor has spent approximately $1 billion establishing nearly 12 new bureaucracies which appear immune to cuts while funding has been slashed for private health insurance, public hospitals and dental health.

The changes to Lifetime Health Cover in this bill will increase premiums by up to a reported 27.5 per cent on 1 July this year. This will directly affect lower income Australians. Presently the LHC loading is removed after 10 continuous years of hospital cover. Once again, the government is changing the rules of the game for ordinary Australians. There will be people who are close to having their loading removed, having paid their loading in good faith and abided by the appropriate rules and regulations. Now they will be slugged with a 27 per cent increase in premiums and forced to receive the impact.

The means-testing changes already created around 12 different pricing structures for premiums, further complicating a system that many Australians find very difficult to navigate. Changes to LHC will further increase the administrative burden on private health insurers, with short time frames to change systems by 1 July this year. The changes proposed by this government can only be counter-productive and will discourage many battlers from taking out and maintaining private health insurance. The previous coalition government's private health insurance reform in the form of rebates, Medicare levy surcharge and lifetime health cover saw the number of people with private health insurance increase 75 per cent from 6.1 million people to over 10.7 million people.

The Private Health Insurance Legislation Amendment (Base Premium) Bill 2013 covers the base premium. It is clear that these measures have been introduced because of the disastrous fiscal situation of this current government. My concluding points must necessarily refer to the irregular pattern during the tenure of the current Labor government, namely the manner in which the current Prime Minister has sought to rush this legislation through the House. The coalition believes that the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 is not in the best interest of the Australian people.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

The Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 before the House is not a health bill at all. It is not concerned with providing health services to the people of Australia. The reality is this is actually a Treasury bill. It is concerned with an illegitimate government and its dodgy smoke and mirrors budget. It actually should be being presented by the Treasurer, certainly not the Minister for Health, and we should be discussing the $386 million that the government is planning to claw back out of the hands of those Australians who take responsibility, who are directly concerned with their health and who invest in their own health. However, since the Labor government is prepared to use this duplicitous manner, we will discuss the impacts of this measure on the health of the Australian people.

The bill amends the Private Health Insurance Act 2007 to remove the private health insurance rebate from the lifetime health cover loading. We should take note that the explanatory memoranda of the bill trumpets it proudly that the intention of this bill is to ensure that all recipients of the income-tested rebate receive a comparable benefit relative to their premium cost disregarding any lifetime health cover loading that applies. This statement, I believe, could be straight from the lines of Sir Humphrey in Yes Minister. It is a Labor government sugar coated spin—one thing we are used to—way of telling us that this government is actually slashing the rebate received by private health insurance holders—ordinary Australians.

The government is actually trying to convince private health insurance holders that they will be better off when they say that all recipients of the income tested rebate receive a comparable benefit relative to their premium costs. The reality is far different. For Australians who did not take out private health insurance before their 31st birthday and who will therefore have to pay the additional fee imposed, the lifetime health cover loading cost will not be rebated. This means a reduced rebate for the consumer whose private health insurance will actually cost them far more. In fact, it is reported it will increase premiums from 10 to 27.5 per cent on July 2013, directly affecting—as we know—lower-income Australians and the 67,396 with private health cover in my electorate of Forrest.

Of course it is going to be the government that makes the most money out of this deal, not the Australian citizen, yet the government has the dreadful gall to hide this fact in what is deceptive prose. It might be argued by those opposite that it improves the incentive to take up private health cover but in reality this is again—as we are used to with this government—a spurious and misleading argument. It implies that there is not a sufficient incentive now to take out private health insurance.

Debate interrupted.