Steve Fielding (Victoria, Family First Party) Share this | Hansard source

Family First believes the government is selling out Australian families by selling Medibank Private. Private health insurance is important to Australian families, where take-up rates are highest amongst couples who have children. Private health insurance is important as it gives families a sense of security and peace of mind. Private health insurance has become an essential service for many families who want access to quality hospitals at affordable prices. Private health cover is the only option for many Australian families. The government is partly responsible for this situation. It has forced many Australians into health insurance by offering discounts for cover and by punishing families, if they sign up later on, with high premium fees. Families will be worse off if Medibank Private is sold, as its sole focus would then be profits for shareholders. Profits for shareholders, rather than service to members, would become the priority. Family First believes the needs of Australian families must come first; profits should not come before families. Instead, the government has turned its back on families by putting forward the Medibank Private Sale Bill 2006 to sell Australia’s largest health insurer. Not only that, the government will be making Medibank Private a for-profit company listed on the share market.

The government did have the option of making Medibank Private a mutual fund so that it was not for profit and kept its focus on the needs of members rather than shareholders, but it rejected that option in favour of one where Medibank’s priority will be for profit. The values of the market are more important to the government than the need of families for good value health insurance.

Medibank is not a mutual fund but, as a not-for-profit government owned business, it has a characteristic similar to a mutual’s of putting members’ interest before profits and shareholders. The sell-off of Medibank Private is yet another example of the government’s so-called ‘family friendly’ policies being nothing more than market friendly.

Family First has launched a national grassroots campaign to pressure the government to abandon its plans to sell Medibank Private. This includes distributing ‘Hands off Medibank Private’ bumper stickers. Family First will continue this campaign to help the government change its mind and do the right thing by Australian families. The government eventually realised it was not doing the right thing with Snowy Hydro and stopped the sale. The government should also change its mind and stop the sale of Medibank.

Who benefits from the sale of Medibank Private? Not the people who own health insurance policies with Medibank. The government will benefit by flogging off another asset. Investors may benefit and those who have some extra cash to buy the shares might also benefit, but everyday Aussie families will miss out on the spoils and have to deal with higher costs and reduced benefits.

A privatised Medibank Private would first and foremost have to make money for its shareholders—lots of money. Its top priority would be profits—delivering maximum returns to shareholders. This would lead to increased premiums and reduced services. Australian families are already struggling and will be worse off with a privatised Medibank Private motivated solely by its profits and the bottom line and helping to lead the private insurance industry down this path.

Family First has a fundamental disagreement with the government over the aims of Medibank Private. The objective of Medibank should be to provide a service to its members at the best possible price, not to make as much profit as it can. As health insurance has become an essential service for many Australian families, there is a legitimate role for government to provide this service to satisfy members rather than profits.

Professor John Deeble, a former commissioner in the Health Insurance Commission over the 14 years that the commission managed Medibank, explained to the Senate committee looking into this bill that it was set up to provide an affordable service rather than to make money. Rather than focus on providing a good service, the government has decided that Medibank should be a competitive for-profit business listed on the share market.

The government issued a report by consultants CRA International which made claims of how much better Medibank Private would operate as a privatised listed company. But the CRA report was written from the perspective of market ideology, where an organisation is defined as efficient if it can turn a profit for its shareholders. To make that profit, Medibank will have to cut benefits to members. This is part of a strange notion that a company that provides poorer service and charges higher premiums is the better company because it provides better returns to shareholders! The AMA pointed out that the CRA International report cites MBF as a more efficient fund than Medibank Private on the grounds that MBF pays lower benefits.

The issue comes back again to a fundamental disagreement over what the overall objectives of Medibank Private should be: to make profit or to service members. Family First believes Medibank Private’s main objective should be to serve members. The government argues that privatising Medibank would put downward pressure on premiums. Family First believes this is complete nonsense, as there is already competition between health insurance funds. Privatising Medibank Private would in fact put upward pressure on premiums because it would face the extra pressure of having to make more money in order to satisfy both the tax office and shareholders. A privatised Medibank would have to earn 30 per cent more just to cover the loss of tax-exempt status. It is that tax-free status that helps keep premiums down, not the incentives in a for-profit structure.

The other significant cost of privatisation is that Medibank Private would have to provide a return to shareholders, which is money it previously did not have to find. The best way to ensure families can afford health insurance is for the government to be a player in the sector to keep everybody honest. If the government no longer has a financial interest in the industry, how long will it be before its role of regulating premiums will become nothing more than a rubber stamp? How long will it be before an increasingly profit focused industry pressures the government for higher and higher premiums? Just last month, the chief executive of NIB Health Funds admitted the Medibank sale would cause a ‘tsunami’ of change in the industry with ‘fewer and larger players’. NIB is also considering following Medibank’s lead by demutualising and floating the company.

Private health insurance is important to Australians. More than one in two adults have made the financial sacrifice to take out insurance, with the largest rates of private health insurance being among couples with children. However, two-thirds of those who do not have health insurance say it is because it is already too expensive. Given the significant government investment in health insurance, it is vital that the government continue to ensure access to private cover is affordable and accessible to as many Australian families as possible.

If the government is serious when it claims to care about Australian families, it should ditch its plans to sell Medibank Private, which will lead to higher premiums and reduced services. Family First believes the government should retain ownership of Medibank Private for the public good, to ensure affordable health insurance and quality health services for all Australian families.