Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Aged Care, Disabilities and Carers) Share this | Hansard source

In making a contribution on the second reading, I seek leave to incorporate my speech.

Leave granted.

The speech read as follows—

The bill before the chamber is health legislation Amendment (Private Health Insurance) Bill 2006. This bill makes changes to the Private Health Insurance Ombudsman (PHIO) powers and also makes minor amendments with regard to the administration of the private health insurance rebate by Medicare Australia and the ATO.

This bill will make changes to the PHIO to expand and enhance his powers so that in addition to dealing with consumer disputes with funds, he can now examine issues related to the arrangements between the insurer, the provider of the service, ie the hospital and brokers.

The amendments will allow the PHIO to become involved in the mediation of disputes, although on a voluntary basis only.

This bill will also make the necessary amendments so that:

• The PHIO will be able to direct participation by the subject of a complaint in compulsory mediation
• S/he will be able to mediate between a health fund and a health care provider on his of her own initiative or at the Minister’s request, including directing participation in compulsory mediation;
• The PHIO will have the necessary powers to require the production of records not only from health funds, but also from health care providers and brokers; and
• The PHIO, PHIO staff, external mediators, and persons dealing with the PHIO are appropriately protected from civil and personal liability arising from the increased powers.

The bill also makes an important amendment to the legislation as it inserts an objects clause. This objects clause is important because it ensures that the PHIO will focus on consumer protection, even though the PHIO’s powers are extended to examine issues related to providers.

The last think Labor wants to see in an Ombudsman focusing only on dispute resolution – eg. Contractual disputes – between funds and providers – when its purpose surely should be to focus on how these issues impact on consumers. It is not the ombudsman’s role to act as the referee on pricing and service disputes between funds and providers. That is a job for the parties, themselves and of course, the Department of Health.

The government has stated that the purpose of the additional powers is to increase the effectiveness of the PHIO in resolving complaints and contract disputes.

Labor will support any measures taken to ensure that consumers are protected and have an advocate in the complex and difficult to navigate private health insurance sector.

Labor does, however, have some concerns about the consultation that took place in the lead up to this bill. The industry directly provided their input on this extension of powers. That is appropriate – in fact if, it didn’t occur there would be a real issue and we recognise that they support these changes.

We are aware however, that direct consultations did not include consumers and consumer groups, and the Minister’s request for submissions, through the Private health Insurance Circulars – came only 3 weeks before the deadline for submissions – which coincided with the Christmas week.

One of the biggest issues facing consumers is the affordability of their private health insurance and I would have thought consultation of consumers was integral to finding an agreed position on the PHIO. We know that premiums have been increasing at a rate over twice and three times that of CPI, and this has had the effect of negating the private health insurance rebate. It is important that even with the rebate, we do all that we can to keep private health insurance affordable and accessible.

This is particularly the case for those who rely on it for access to dental care, because without PHI people who need regular care have been abandoned since the Howard government’s abolition of the commonwealth Dental Scheme. Indeed, Mr Abbott believes if you can’t afford PHI you should rely on charity to get your teeth fixed.

Returning to the issue of consumer input to these changes to the PHIO; these changes will have no effect on the PHIO’s ability to deal with complaints relating to private health insurance premiums, and the changes will not allow the PHIO to make recommendations on these complaints as it can with other issues.

While the Department has argued that complaints about premium increases have been decreasing, this can be attributed to the PHIO’s lack of power to take any action in this area. While the regulation of annual premium increases is the responsibility of the Private Health Insurance Administration Council, there is no scope for the PHIO to examine, from a consumer’s perspective, the reasonableness of premium increases or the variability from state to state and fund within these states.

Recent evidence has shown that this variability costs fund holders as much as $290 more in some states – with Victorians facing the highest annual premiums for a comparable Medibank Private Hospital policy for a family. This means that Victorians pay up to 25 per cent more than Queenslanders for the equivalent hospital policy – and that Queenslanders pay up to 20 per cent more than their NSW counterparts.

Labor is concerned that the sale of Medibank Private will further add to the variability in the cost of health cover for Australians living in different states. Australia wide, Medibank enjoys a market share of 28.8 per cent and in some states, this concentration is much greater;

• In Queensland – 36.2 per cent
• In Victoria – 38.4 per cent
• In Tasmania – 35.7 per cent
• In NT – 44.3 per cent

This is why Labor is proposing an amendment which builds on some changes being made by this bill which relate to the PHIO’s ability to make recommendations to the Minister and the department. These amendments, which form part of this bill, extend the PHIO’s ability to make recommendations to the Minister or Department regarding disputes and conduct of brokers and providers, in addition to funds, as is already the case.

Labor is supportive of this extension, but would like to see this mechanism extended so that the ombudsman can use these provisions to further investigate premium increases.

This would involve the Ombudsman using his extended powers under this Act, in connection with the Trade Practices Act, so that the PHIO could make recommendations to the minister which would enable him to direct the ACCC to monitor the private health insurance industry’s pricing.

The amendment Labor is proposing not only makes changes to this bill, but also requires some changes to the Trade Practices Act (TPA).

The TPA allows for Price monitoring, whereby the Minister directs the ACCC to monitor the prices, costs and profits of companies and government authorities in relation to specified goods and services and to report the results of the monitoring to the Minister. While this monitoring role has been used infrequently, it has been used in cases where a particular market or sector has undergone some sort of structural change or reform, for example, in the case of the dairy sector.

The TPA also allows for the Minister to direct the ACCC to hold an inquiry into specified matters and report its findings to the Minister who then makes decisions on the recommendations. According to the Productivity Commission report, public inquiries initiated under the PSA have been used for a number of purposes, including;

• To determine whether pricing outcomes reflect competitive market forces and
• To advise the Minister on what types of prices oversight, if any, should be applied to the company or companies under inquiry.

It is important to note that recent changes to the TPA state that prices surveillance is to be applied only in those markets where the Minister believes competitive pressures are not sufficient to achieve efficient prices and protect consumers.

Labor thinks this will be particularly important following the sale of Medibank, when the sector is sure to see some consolidation and increase in concentration.

Its important because not only will competition fall, and concentration of market power occur in some states, but we don’t know what the effect on premiums will be, and neither does the Department of Health.

In the recent Budget Estimates hearings, the Department of Health was asked about the effect that the sale would have on premiums. Departmental officials confirmed that they had undertaken no work, no modelling to examine the impact of the sale on the market and on premiums. To our surprise, they also confirmed that they had no intention of finding out what the effect may be.

This is the case even though the Minister for finance and Minister for Health have asserted that this will put downwards pressure on premiums. I am not sure how these Ministers can assert this without any evidence or modelling; if the Ministers want to continue to assert this they must make it clear where this evidence exists or instruct the Department of Health to do the work necessary to find out what the effect will be.

Labor supports the intent of the bill but we need to make the point that it could have done much more to protect health consumers. That’s why Labor will move the tabled amendments to further protect members of Private Health Insurance funds.

I move:

At the end of the motion, add “but the Senate is of the view that the Minister for Health and Ageing stands condemned for failing to:

(a)

address the concerns of members of Medibank Private and proceeding with the sale of Medibank Private even though the majority of Australians are opposed to the sale; and

(b)

address critical structural weaknesses in the health sector such as workforce shortages and the rising costs of health”.