Gary Humphries (ACT, Liberal Party) Share this | Hansard source

I want to rise in this debate to support this Private Health Insurance Bill 2006 and related legislation and to indicate that I think it is a very positive and effective step in a number of directions. As the minister himself said in introducing this legislation, it is designed to be of benefit to private health consumers, private health insurance providers, private health insurance companies and the community generally. I believe that, on any of those tests, this legislation can certainly be seen as a step in the right direction.

I think it would be unfortunate if people listening to this debate were to draw the conclusion that the legislation that is before the Senate at the moment is in some way an adverse outcome for Australian health consumers. I heard Senator Allison, earlier in this debate, describe the legislation—I think she said this—as ‘an insidious step in the white-anting of our health system’. I heard a series of criticisms from Senator McLucas, and I heard the usual attacks from Senator Brown on the concept of private health insurance. It would be unfortunate if it were not recorded in this debate that the Senate Standing Committee on Community Affairs, which I chair, conducted hearings into this legislation. The committee heard a majority of witnesses before the inquiry—organisations as diverse as the Private Health Insurance Association, the Australian Medical Association and a number of organisations representing different areas of health consumption, such as motor neurone disease—affirm that they supported the direction of this legislation.

This is a good step towards creating flexibility for consumers of health services in Australia. Let me explain why. At the present time private health insurance in Australia covers a very significant number of Australians—something like 12 million Australians. It provides for a range of services to be supported through the payment of a premium. Those services tend, at the moment, to be concentrated on hospitals, particularly private hospitals in Australia. Despite putting on record the fact that private hospitals in Australia are of a very high standard and meet very important delivery outcomes for the people of Australia, it is nonetheless true to say that there is considerable room for those services to be diversified. For example, at the moment, if a person wishes to obtain dialysis, one might do so through a public hospital. If one has insurance, one might do so through a private hospital, but there are limited options, at the moment, for obtaining that dialysis in the private sector—such as in a community health setting or in a facility designed for that purpose, perhaps even in a doctor’s surgery. There are limited opportunities for those services to be provided to Australians outside hospitals.

We know that hospitals are important parts of our health system, but they are also very expensive parts of our health system. It is logical that we should consider ways of being able to shift some services out of hospitals—where that can be achieved effectively in a clinical and cost-effective sense and where benefits accrue to the community by virtue of that occurring. That is what this legislation is all about. It is about creating a more flexible health system where the users of private health insurance products are able to get a broader range of services that suit the needs that they bring to the health system.

That is essentially what this legislation does. I am sorry that there has been so much criticism of it in the course of the debate today, because the witnesses who came before the inquiry affirmed that they saw this as a positive step. There were some concerns about the way in which this will work, and indeed a number of witnesses suggested amendments to the legislation. A number of those amendments have been picked up by the community affairs committee and made as recommendations to the government to adopt. I look forward to those issues being examined seriously and effectively by the government.

I want to pick up on a number of points that were made in the course of the debate, to indicate why I believe this legislation, in its present form—with some amendments—needs to proceed. First of all, Senator McLucas made fairly strong comments about the possibility of this legislation resulting in increases in premiums. That is an unfortunate line of attack because, as we know, there has been a tendency for premiums for health insurance to rise. Those rises are very easily misunderstood and mischaracterised in the Australian community. Some people suggest that this is because the health system is out of control or because the government does not exercise enough control over the circumstances under which rises are allowed to occur and that this is somehow a sign of the system breaking down. Of course it is not any of those things.

Rises in health insurance premiums reflect the reality that the cost of medical services in this country, and indeed everywhere in the developed world, is rising. It is rising because new drugs are being discovered every day which alleviate conditions which previously were not treatable or not treatable effectively, new technologies are being applied and greater training is being employed to increase the understanding of the way diseases operate. All of those things have an effect on the cost of medical services.

It is frankly disingenuous to pretend that you can somehow, as a government, an alternative government or a minister for health, stand on the shore and hold back the tide of the rising costs of our health system. It is a reality which every government in the Western world is facing and which governments in this country will continue to face for some time to come. It does not mean you cannot adjust the system to decrease the pressure on health insurance premium rises, but nonetheless those rises will most likely continue to occur. The rate of inflation for medical services has historically been higher than the rate of inflation for other services and goods in the community generally. We cannot get away from that fact.

This legislation is designed to give us a more flexible approach to those issues, and it has the potential to result in smaller rises or even no rises at all. If services can be provided outside hospitals in community settings, for example, rather than in hospitals where necessarily costs are very high then there is a chance that those services can be provided more cheaply. By doing that, those services will be provided at less expense and with less pressure on health insurance premiums. That is a good thing, and we should welcome that and embrace the flexibility this legislation creates to achieve that outcome.

We had a general attack from Senator Brown on private health insurance, in the course of this debate, criticising the people who take out private health insurance—in fact, I understood him to be describing them as supporters of the government. He said that supporters of the government get benefits but the rest miss out. I would be very interested in taking a straw poll of which members of the Senate, including those on the other side of the chamber, have private health insurance. I suspect there would be a very large proportion who do. I think they would baulk at being supporters of the government. There are millions of Australians, who might not be described as supporters of the government, who nonetheless have made the decision to take out private health insurance. They do so because they see that they get value for money out of it.

No-one likes to see rises in premiums, and I do not think anyone believes a government or an alternative government that promise they can stop rises in premiums, especially if they do not outline how they propose to achieve that miraculous event. But nonetheless private health insurance is an important part of our health system and, most importantly, it takes an enormous amount of pressure off our public hospital system. If those 12 million or however many Australians were without private health insurance, there would be an enormous shift of demand onto our public hospital systems. I do not need to tell anybody in this Senate what tremendous pressure public hospitals in this country are already under, how underresourced they generally are and how they would simply not cope if they were dealing with not only public patients but also the private patients who are presently being assisted through private health insurance.

It is all very well for those opposite to bemoan the cost of the private health insurance rebate and to say this might be money better spent somewhere else, but the fact is: you cannot devise a system without it which does not result in tremendous pressure—indeed, probably intolerable pressure—on Australia’s public hospital system. It simply does not work. It particularly does not work if you are not prepared to outline what your alternative is. I say to those opposite: we are approaching a federal election. If you do not think the present system is working, tell us what you think will work better. Of course, we are yet to understand what that alternative might be; presumably, we will find out some time before Australians go to the polls.

Another issue raised by Senator McLucas in the course of the debate was a technical issue relating to the role of PHIAC, the Private Health Insurance Administration Council. She suggested that one of the criteria for PHIAC’s operation should be to reduce premiums or to prevent rises in health insurance premiums. I say to her, through you, Madam Acting Deputy President: that is on the face of it a reasonable suggestion, but when one delves a little closer one realises that there are problems with that proposition. The Private Health Insurance Administration Council’s role is to examine proposals for new products to be added to the list of those which are funded through private health insurance. If someone comes along and says, ‘I want to add this product of dialysis in a non-hospital setting; will you approve that?’ it is their role to see whether this makes sense, whether it is clinically effective, whether it will be a good service to provide to Australians and then, if it is, presumably to tick it off.

A consequence of adding new services to the list of things which are covered by private health insurance is—theoretically, at least—that costs increase as a result of that. You may have a new service which is very good and likely to be used but which will add to the cost of private health insurance premiums. None of us wants to see that, but we have to acknowledge that there is a trade-off between increased premiums and increased services on occasions. These changes propose to allow for Australians to get not just—let’s hope not—theoretically increased premiums but also better services at the same time. If that were the case, we would need to make a decision about how effective those additional benefits might be versus the cost of them. But, if PHIAC’s role were to minimise the cost of premiums, it would be in the difficult position of realising that new services might cost more and increase the cost of premiums, and it might be obliged on occasions to knock back those new services because they add to the cost of a premium. That would be an unfortunate outcome, particularly if there were people who wished to purchase those services. With respect to Senator McLucas and the Labor Party, that position looks superficially sensible but in fact it is others who need to make the decision about the effectiveness and cost of premiums, rather than PHIAC, the Private Health Insurance Administration Council.

Senator McLucas picked up on a suggestion made during the inquiry that the legislation needs to build in a protection for doctors’ clinical decision making—that that decision making needs to be respected and made central to the way in which the legislation works. I think there is a case for that. I do not doubt that the clinical integrity of doctors’ decisions needs to be preserved as part of the operation of our health system, but I am not sure that it has a role in respect of the way services are constructed for the purpose of offering a product through private health insurance—for example, it may be assessed as logical or cost-effective to not offer a certain service in the private sector, in a hospital or outside a hospital. A doctor may disagree. A doctor may say: ‘I think this service must be provided in the hospital. I don’t wish to have that service provided anywhere else but in the hospital.’ It is very hard to determine through the private health insurance process that a product should occur outside a hospital setting if a doctor or doctors are saying, ‘No, we have a different view about where that should be provided.’ In fact, I think it is easy to argue that there are different levels at which that decision making ought to occur that protects a doctor’s clinical judgement and that it should not occur at the level of this legislation.

There has been criticism about there not being enough indication within the legislation on issues such as informed financial consent. Senator Brown made criticisms about things that were not in the legislation. This is not legislation about private health insurance generally or about a range of services available to consumers; it is about increasing flexibility in this particular area of our health system. There is room for other legislation to deal with those issues if necessary.

I want to finish by saying that this legislation takes Australian health care into a new realm. It engineers a level of innovation, flexibility and choice which our health system needs. It is a heavily structured and regulated system. No-one should pretend, in looking at this legislation, that in some ways we are intruding into an area which is basically operated by the market; far from it. It is a system which is very heavily influenced by regulation, and this legislation seeks to make that regulation a little more flexible and to provide for new services to emerge in a setting that is appropriate for those new services. I think that is only to be seen as a good thing. Some testing of this new model is required, and I am sure that will occur. I have no doubt the minister is closely watching what happens with this legislation. I have no doubt that, if changes are necessary, they will be made. But I am confident that this is the right start. It is a very good step towards greater flexibility. It should, in some areas at least, reduce pressure for premium increases, and I look forward to seeing how effectively it delivers services to the Australian community.