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

The Private Health Insurance Bill 2006 and cognate bills represent a significant change to private health insurance policy. As the government says, this legislation is the most significant package of changes since the private health insurance rebate and Lifetime Health Cover scheme were introduced in 2000-01.

The most important policy change included in the package is the extension of private health insurance to provide cover for medical services provided outside of hospital. Under ‘Broader Health Cover’, as it is known, private health insurance funds will be able to cover medical services provided outside of hospitals for the first time. New services included under Broader Health Cover will include services which either substitute for in-hospital services, such as chemotherapy and dialysis provided in the home or community settings, or services which are designed to prevent hospitalisation in the first place. Broader Health Cover will also provide insurance for services designed to prevent people needing to go to hospital, including chronic disease management programs and health promotion programs.

This package represents a significant change in the way we think about health care—in particular, in trying to find ways to keep people out of hospital and to manage chronic illness better. For this reason, as my colleague Nicola Roxon, Labor’s shadow minister for health, outlined in the other place, Labor supports this package. But we do have some concerns, most importantly that the government seems only to see fit to go down this path for private insurance rather than for the whole health system.

Clearly, the private health insurance industry can see that it is better for their policyholders to stay out of hospital if they can. Keeping people out of hospital also makes good economic sense. This is precisely the rationale for Labor’s call to embark on some wider reforms of the health system, particularly in the area of Commonwealth-state relations. Unfortunately, the government has not turned its attention to this issue at all.

As I said, Labor is supporting this package of legislation because we believe it may provide significant benefits for the 44 per cent of the Australian population who currently have private health insurance. Labor supported the private health insurance rebate at the last two elections and will support it again at the next election. Labor accepts and understands that many Australian families have come to rely on this support and we will not be taking it away. So we are pleased that this package could mean that people with private health insurance cover might get better value for their money. And longer term, if it means that we manage chronic illness better and keep people from multiple re-admissions to hospital, obviously that will be desirable for the health of the nation as a whole.

Labor does, however, have a number of concerns about the package. Our main concern here is not primarily with the content of the package—as I said, we support the goal of keeping people out of hospital where possible, and the goal of preventing and better managing chronic disease. Our primary concern is about what happens to those not insured and therefore not covered at all by these changes.

The expansion of private insurance to out-of-hospital services raises equity issues around access to services equivalent to those under broader health cover reforms for people who do not have private health insurance. People without private health insurance, even after these reforms, will continue to be able to access services such as chemotherapy and dialysis through the public system in hospitals. But the privately insured will have options that may well become not just choices regarding a more comfortable venue for their treatment but also choices which will have significant health impacts, especially if, for example, they have better access to preventive and chronic disease management programs than those who rely on the public system. If this turns out to be the case, then it can be argued that the privately insured will have access to a better overall quality of health care. The logical extension of this argument is that people who cannot afford private health insurance may be more likely to end up in hospital because, unlike people with private health insurance, they might not be able to access programs which could prevent them from having to go to hospital. This issue was examined in detail by the Senate committee inquiry into these bills.

It is this element of the package with which Labor is most concerned. We believe it presents a departure from the current balance between privately and publicly funded services and the rationale that private health insurance gives private health insurance consumers additional choice. Unless there are changes in other parts of the health system to create the necessary incentives for public providers to provide similar services, universality as the core of our health system will be threatened.

The government disputes any suggestion that this package represents a shift towards a two-tiered system of health care. But if the broader health cover provisions give people with private health insurance access to services and treatment options which people without insurance may not have access to—and potentially may be disadvantaged by not having access to—then the package will be doing exactly that. As I mentioned earlier, Labor will support this package because we want those with private health insurance to get any improved benefits that they can. We expect that it will have significant benefits for private health consumers and in particular we believe that it will lead to important innovations in care and services provided outside the hospital gate.

Having introduced these changes for people with private health insurance, we urge the government to work toward addressing access to these kinds of services for the uninsured. With the negotiations over the next set of Australian health care agreements due to start this year, the government has a perfect opportunity to show its concern for keeping people out of hospital and for those who rely on the public health system.

There are several other parts of the government’s private health insurance policies that Labor have concerns with. For example, the government insists that the package will not have any impact on premiums. In fact, in his second reading speech the health minister went as far as to argue that some of the changes will actually reduce pressure on premiums. We remember the last time that the government said one of its policies would reduce pressure on private health insurance premiums, and that was in 2000 and 2001 when the private health insurance rebate and the Lifetime Health Cover scheme were introduced. Since then, as anyone with private health insurance knows, there has been a 40 per cent increase in private health insurance premiums. Given the government’s track record, why should we believe anything that Mr Abbott says about private health insurance premiums? Is it not counterintuitive to think that expanding the services offered will reduce premiums? If we manage people’s care particularly well in the long term, we may—and I underline ‘may’—make some decent savings, and the insurers no doubt have this in mind in wanting to go down that path. But, in the short term, we are concerned that the changes may in fact have the reverse effect and lead to further increases in private health insurance premiums in this country.

We should not be accepting the minister’s word on this issue. Despite Minister Abbott’s rhetoric about wanting to protect consumers by retaining his role in reviewing premium increases, this bill actually weakens the existing legislative framework in this regard. Under the National Health Act currently, one of the objectives of the Private Health Insurance Administration Council, PHIAC, is to minimise premium levels. However, in the Private Health Insurance Bill that we are debating today, this objective has been removed from PHIAC’s remit. One has to question how serious the government is about keeping premiums down if it is not prepared to include these kinds of consumer protections in the bill. Labor moved an amendment to the bill in the other place to address this issue and will do the same during the committee stage in the Senate. Mr Abbott said in the other place that he would be prepared to consider Labor’s amendment. We urge the government to support it, or the Australian public is entitled to conclude that the government is not serious about its promises on private health insurance premiums.

I would like to turn to a number of specific issues relating to the package. Labor are concerned that the bill does not pay enough attention to the standards and quality of services to be provided under the rubric of Broader Health Cover. We need to ensure that consumers have the protection of robust quality and safety standards wherever those services are being delivered. The legislation to provide for quality assurance mechanisms for Broader Health Cover products does not take effect until July 2008—in other words, there will be a 15-month gap between implementation of Broader Health Cover in April 2007 and implementation of the standards and quality provisions in July next year. Labor believes this represents an unacceptable risk to consumers of private health insurance.

Labor moved an amendment to address this issue during the debate in the other place which, unfortunately, the government refused to support. The issue was also discussed by the Senate committee’s report into the legislation. The Senate committee heard from several important stakeholders such as the Australian Private Hospitals Association and Catholic Health Australia, who share Labor’s concern about quality and safety standards. The Senate committee recommended:

That to demonstrate a commitment to quality improvement and to guarantee patient safety, existing quality assurance, professional standards and accreditation regimes should continue to apply to broader health cover services provided until alternative accreditation or equivalent arrangements have been put in place under this legislation.

We urge the government to accept the committee’s recommendation, and Labor will move an amendment to this effect in the Senate.

Labor also shares the concerns of interest groups such as the Australian Medical Association about the lack of sufficient safeguards in the bill for doctors to expressly continue to make clinical decisions in the best interests of their patients. Some groups have raised concerns about this package as being a move towards managed care—that is, a system whereby the private health insurer assumes responsibility for the health costs of its members, through, by example, direct contracting arrangements with doctors and other providers. This means that the private health insurance provider would be involved in the clinical decision making concerning the patient.

The clinical freedom of doctors as against health funds or any other groups, including governments, to determine the best course of treatment for their patients is a fundamental of the Australian health system which Labor believes should be protected at all costs. This issue was again considered at length in the Senate committee report. Many important groups in the health sector, including the AMA, the Australian Private Hospitals Association and the Australian Physiotherapy Association, share Labor’s concerns about protecting the clinical autonomy of health professionals.

The Senate committee recommended that the operations regarding clinical independence currently included in the bill be reviewed after four years:

... to ensure that the implementation of broader health cover has not resulted in any reduced clinical oversight of patient care nor had any negative impact on the quality of and delivery of health services to patients.

Labor support this recommendation, but we also believe that more robust protections of doctors’ clinical autonomy ought to be included in the legislation now. Labor moved an amendment in the other place to address this issue and will be doing the same during the committee stage in the Senate. Again we urge the government to support our sensible amendment.

In addition to the introduction of Broader Health Cover, the bill contains some policy changes of note. The first is the introduction of a requirement for private health insurance funds to produce standard product information on their private health insurance products. People recognise how difficult it is to compare offerings from competing private health insurers—I have to say it is a bit like comparing mobile phone packages. This requirement in the bill is designed to make it easier for consumers to compare different products and to understand what entitlements they may have when they take out a policy. Labor strongly support the introduction of these requirements as, if they work, they will be of significant benefit to consumers—though we do note the concerns of some stakeholders about the implementation of this measure, as was discussed in the Senate report.

A related issue, also canvassed by the Senate report, is the issue of informed financial consent—that is, the ability of patients to access information about the costs of their treatment before that treatment takes place, except in emergency cases, for obvious reasons. According to the Australian Health Insurance Association, almost 20 per cent of privately insured hospital episodes create unexpected bills. Obviously this is bad for patients, but it is also bad for the private health sector and its relationship with its consumers.

Unfortunately, the government has chosen not to address this issue in this package of legislation. There is currently an information campaign underway to encourage doctors to obtain informed financial consent from their patients, which we understand is having some moderate success. However, we believe this is an important consumer protection issue which the government is dealing with extremely tentatively.

The bill will also introduce a change to the Lifetime Health Cover scheme, whereby people who have retained private health insurance for over 10 years will no longer be subject to Lifetime Health Cover loadings on their private health insurance premium, even if they took out their insurance after they turned 31. Labor supports this change.

This package of bills will also streamline the private health insurance legislative framework by bringing the main components of the existing framework and the framework for the new policy proposed by the package under one act. We of course support these changes, though we do share the concerns of some stakeholders, including the Medical Benefits Fund, who submitted to the Senate their concern about:

... the number of provisions under the Bill which can be modified substantially in whole or in part through the making of rules by the Minister or PHIAC (as the case may be).

They were essentially saying that much of the power was now being held by the minister or the Private Health Insurance Administration Council. The Senate committee:

... considers that the over reliance on extensive subordinate legislation to implement important reform packages does not allow for sufficient scrutiny of the objectives of the legislation.

The package will also introduce a change to existing risk equalisation, or reinsurance, arrangements. Labor supports this change, as it will result in a better distribution of the overall insurance risk than the current formula, and so is an improvement on the current arrangements. But we remain somewhat surprised that the government has chosen to adopt this model when it was clearly not the government’s preferred option. The explanatory memorandum makes clear that the government preferred a different model—a capitation model—as this would have been the ‘best strategic option for the longer term’. If there is, in the government’s view, a better long-term option, why did it not pursue it? We also note from the Senate committee report that there are some outstanding issues with the risk equalisation arrangements that are yet to be resolved.

To conclude, as we have made clear both here and in the other place, Labor support the package. We think it is important to focus on prevention measures, on better managing chronic disease and on keeping people out of hospital wherever possible. But Labor are concerned about the equity impact of this package. We are concerned that people without private health insurance will miss out. This is not a reason not to support the package, as we endorse the package’s rationale, but it is a reason for the government to turn its attention to thinking about how people who rely on the public system do not miss out altogether. We want to make sure that those who are not insured get the best quality services as well. Private health insurance should provide people with choice and different options but not a whole range of health services that are not available to others.

I would like to thank the Senate committee—Senator Humphries is here—for the work that they did on these bills in a very short period of time. Once again we were tasked with dealing with an extensive piece of legislation and no regulations—admittedly, they appeared on the morning of the Senate inquiry—and we came up with what I think is a reasonable report, given the time frame that we had to work within.