Andrew Wilkie (Clark, Independent) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Private health insurance in this country is in trouble. Indeed figures released by the Australian Prudential Regulation Authority earlier this year show that in December 2018 there were some 65,000 fewer Australians with health insurance when compared to the year before, marking the greatest yearly decrease in private hospital cover in 15 years.

No wonder the President of the Australian Medical Association, just last month, warned that the private health insurance sector in Australia is 'on the precipice'. Mind you, other experts go even further, claiming the sector is in a death spiral because, as the premiums for private health insurance go up, more people drop out, which then causes the premiums to rise again, and so on and so on, in a vicious circle.

Something must be done about all this and this bill is a start because it would put in place three essential reforms which will help combat the downward spiral of the private health insurance industry and promote the health and wellbeing of patients. Firstly, this bill amends legislation to prevent private health insurers offering differential rebates, which is important to promote patient choice and autonomy. Secondly, this bill prevents private health insurance companies from acting as both insurers and providers of medical treatment, which is important because inherent in current arrangements is a profound conflict of interest. Clearly, the very distinct roles of insurers hoping to minimise payouts and service providers like dentists hoping to deliver quality health care must be kept separate in order to promote patient health and welfare. Thirdly, this bill helps regulate the use of data that private health insurers obtain from HICAPS, because it gives APRA the ability to intervene if it believes private health insurers are inappropriately using data to manipulate the market. This will help prevent an anticompetitive health insurance market and prioritise patient care over maximising profit.

Returning to the bill's first reforms: I would add that I agree with the AMA that the government must stop health insurers from favouring one provider over another. This is also entirely consistent with recommendation 12 of the report into the value and affordability of private health insurance and out-of-pocket medical costs conducted by the Senate Standing Committee on Community Affairs in 2017, which urged the government to prohibit differential rebates. To that end this bill enshrines this recommendation and prevents private health insurers from awarding differential rebates for the same treatments provided under the same product in the same jurisdiction. Remember, differential rebates restrict the patient's ability to choose the professional they want to carry out their medical procedure. So when private health insurers push their members to obtain treatment from preferred providers they are engaging in blatant financial manipulation. This is undeniably inappropriate because private health insurers should not be able to exercise such a level of power and control over a patient's health care. It is grossly unfair and a profound conflict of interest.

This brings me to the second flawed practice this bill reforms. Currently, private health insurers are allowed to act in a dual role and own and operate medical clinics that provide medical services to patients. This is a blatant conflict of interest. How can health insurers deliver the best possible health care to patients when their primary motivation is to minimise claim payouts, a matter undeniably turbo charged by for-profit companies like Bupa. Clearly, there is a direct conflict of interest that the people who substantially pay for these treatments are also choosing what treatments are given. No wonder reports by the ABC suggest that providers of medical treatments employed by private health insurers are being encouraged to meet targets and KPIs for the number of patients they see and the number of procedures they complete. Clearly, this has a dire potential consequence because the level of treatment and care that patients receive is being directly impacted and potentially reduced by the corporate need to meet specific targets to reduce costs and for some companies at least to maximise profits.

This impact can obviously eventuate in a number of ways. For instance, a submission to the Senate Standing Committee on Community Affairs in 2017 stated that some preferred provider practices and those owned and run by corporations put pressure on employed medical professionals to see a certain number of patients per hour. Surely this must be a barrier to medical professionals conducting thorough investigations, diagnoses and treatments. In addition, medical practices motivated primarily by profit may overservice their patients. Indeed, in the same submission to the Senate committee, concerns were raised over medical professionals looking to provide treatments to patients that were clearly unnecessary, simply to meet KPIs and performance targets.

Whilst some may criticise this bill and say it would create upward pressure on premiums, it's not like the fees are stable or coming down under the current arrangements. Indeed, statistics released by the Department of Health show that, over the past seven years, private health insurance premiums have risen by an average of over five per cent each year. Left unchecked, things are only going to get worse because the growing dominance of private health insurers in the healthcare market means competition is reducing even more and, with that, smaller independent service providers are being pushed out of the market. Premiums are continuing to rise, and consumers are increasingly price takers.

The spread of the private health insurance industry into the provision of health care will also limit claimable treatments, because as the insurers continue to take over and influence the market, decreasing competition, they will be able to decide what treatments are covered under private health insurance schemes and the rebate that is offered for such treatments. No wonder people are increasingly dropping out of private health insurance because they feel they aren't getting their money's worth, and no wonder this decline is having profound consequences—most obviously the shift in large numbers of patients from the private hospital system to the public system. Remember, public hospitals are already struggling to provide satisfactory health care to patients, and most hospitals simply can't accommodate any big increase in their case load. Nor can the public health system easily withstand private health insurers cherrypicking profitable health services, which, again, distorts the market and leaves the public system to pick up the most challenging and expensive case load.

Nowhere are the challenges faced by the public system more apparent than at the Royal Hobart Hospital in my electorate of Clark, where there are the additional layers of systemic and cultural problems created by the Tasmanian state government's apathy, inaction and bumbling mismanagement. No wonder, in the last financial year alone, some 1,800 patients waited more than 24 hours in the emergency department to be seen by a doctor. Personally, I've met numerous victims of the broken Tasmanian public health system, like the many constituents who have tried to seek mental health treatment at the royal, sometimes waiting days in the ED or turned away because there aren't enough staff or beds to help them; or the concerned mother who has been told her toddler must wait upwards of seven years to receive urgent treatment and surgery for a medical condition.

We must remember that the aim of health care is health care; it is not to utilise information with the intent of exploiting illnesses and ailments of people to make money. This is why the intent of the final reform this bill implements is to protect patients against the inappropriate use of their data obtained by private health insurers, consistent with the recommendation of the Senate standing committee in 2017, and to give APRA the ability to intervene if it believes private health insurers are inappropriately using information obtained from HICAPS to manipulate the market.

Currently, data collected through the HICAPS system, where medical clinics register every claim that is made in the clinic, is sent to private health insurers, revealing the amount clinics are charging and how much money they are making. Private health insurers are able to use this data to analyse the market and, in particular, the prices and income of their competitors. This is particularly problematic when private health insurers are also providing medical treatment, because of the way it gives them an unfair advantage over independent medical clinics. It also means private health insurers may choose to pull medical facilities out of smaller communities that are seen in the management's eyes to not be making enough money.

In closing, can I just say that the evidence is clear: we need immediate and extensive reform of the private health insurance industry not just to prevent the industry's collapse but also to protect consumers and to ensure independent health service providers, like optometrists, dentists and others, can enjoy a genuinely sustainable future. This bill provides a substantial start to those ends.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Is the motion moved by the member for Clark seconded?

Helen Haines (Indi, Independent) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.