Carol Brown (Tasmania, Australian Labor Party) Share this | Hansard source

The package of bills before us, and specifically the main bill, the Private Health Insurance Bill 2006, seeks to establish a comprehensive regulatory regime for the private health insurance sector and to replace the current regime. The other bills in the package provide for the transitional arrangements and consequential amendments to existing legislation.

Measures contained in the main bill, including those relating to Broader Health Cover, the provision of standard product information and changes to Lifetime Health Cover for consumers with 10 years continuous cover, represent a significant change to the private health insurance sector. Labor has stated that it generally supports the bills as they are likely to result in considerable benefits to the 44 per cent of the Australian population that currently have private health insurance. They are also likely to provide some benefits to the 40 per cent of Tasmanians that have invested their hard-earned funds in private health insurance.

In saying that, it is important to note that the benefits contained in this bill will not be accessible for the majority of Tasmanians, who are statistically less likely to have private health cover because of their locality and status as lower income earners. However, Labor supports those measures in the bill that will assist those people with private health cover, particularly the provisions relating to Broader Health Cover and standard product information. Under Broader Health Cover, private health insurance funds will for the first time be able to provide cover for many medical services provided outside the hospital setting by facilitating funds to provide cover for out-of-hospital services that either substitute for in-hospital procedures, such as chemotherapy and dialysis, or are designed to prevent hospitalisation in the first place.

Broader Health Cover represents a necessary step forward in the provision of health care—likewise, the standard product information requirements, under which private health insurance funds will be required to produce standard information statements for their products, should go some way to helping consumers make informed choices and be more aware of their exact entitlements under their particular scheme. Hopefully, consumers will no longer have to sift through numerous forms and documents to try to figure out their entitlements, as has previously been the case, nor will they be caught stranded by having to pay for services they thought were covered by their scheme. However, while Labor tentatively welcomes such changes, it has several significant reservations about the bill and the government’s approach to health care in general. These reservations were shared by several witnesses who gave evidence at the public hearing and are refected in the recommendations handed down in the report of the Senate Standing Committee on Community Affairs.

Labor’s primary concern relates to the implications of the bill and not the specific content. While Labor supports the benefits that the bill will promote for those Australians with private health insurance, it is concerned about the implications for those Australians without private health insurance, who make up the majority. The expansion of the range of services and benefits that can be accessed under Broader Health Cover means that people with private health insurance will logically have greater access to a wider range of health services than those who do not. This is likely to result in the creation of a two-tiered health system in Australia, where those people who can afford private health insurance will have greater access to a wider range of services and benefits than those who cannot.

People who are without private health insurance will be restricted to the services and benefits covered by Medicare, whereas those who have the capacity to purchase private health insurance will have a greater range of choice and, under Broader Health Cover, will have the ability to access out-of-hospital services as well as preventive health programs. This situation seems to produce an illogical result, as research shows that people who can least afford private health cover are the ones who would most benefit from it. People from lower socioeconomic backgrounds are more likely to suffer from certain generally preventable conditions such as obesity and heart disease, which could possibly be avoided if they were able to access preventive health services. By choosing to make these improvements and offer these benefits in the private rather than the public sector, the government has paved the way for the further commercialisation of the health system, whereby access to services is determined by a person’s capacity to pay. While beneficial to people with private health insurance, the provisions are aimed at ‘consumers’—to quote the minister—not the Australian public as a whole, and definitely not at those who need it most.

These concerns about the bill were shared by the Centre for Health Economics Research and Evaluation, who noted in their submission that the bill will:

... create greater complexities ... between the public and private health systems ... enabling service providers and health care insurers to respond with practices that segregate those with health insurance and those without ...

Labor is also concerned that the bill does not provide enough protection for doctors’ clinical independence—another concern which was expressly shared by groups such as the Australian Private Hospitals Association and the Australian Medical Association, who provided evidence at the public hearing. While the bill does provide for safeguards under clause 172-5, these groups considered this safeguard to be too limited. The AMA expressed concern that under the bill there remained real risks that health funds may seek to interfere with clinical decisions made by doctors in relation to patient treatment, such as whether a patient needs to be treated in hospital. They stated:

A broader, more realistic guarantee of no interference in clinical management and clinical decision making ... is necessary. The existing guarantee is too limited.

The APHA shared the AMA’s concerns and recommended that ‘the protection of clinical discretion should be a requirement of all agreements between health insurance funds and all service providers, including hospitals’.

Concern about the threat posed to doctors’ clinical independence resulted in the committee recommending in its report that the provisions in clause 172-5 be independently reviewed four years after the act has commenced, in order to ensure that the implementation of Broader Health Cover has not resulted in any reduction of clinical oversight of patient care or any negative impact on the quality of health services. While Labor supports an independent review of the clause, it believes, as stated in the additional comments attached to the committee report, that the clause should be broadened now to cover all other circumstances in which doctors’ clinical independence may be threatened—such as hospital purchase provider agreements and those that arise from Broader Health Cover arrangements. Labor believes that it is better for the government to have a broad safeguard in place to cover such situations than for it to sit on its hands and wait until something goes wrong. This is what is likely to happen if the clause is not amended and is reviewed only after four years. Labor also included in its additional comments a recommendation that the bill should contain the specific objective of minimising private health insurance premium levels, either in the PHIAC’s objectives or as an explicit responsibility of the minister.

The government claims that the bill will not have an impact on premiums. In fact, in his second reading speech the minister went so far as to state that some of the changes contained in the bill will actually reduce pressure on premiums. However, logic dictates that if the changes contained in the bill will result in funds offering cover for a broader range of products and services then consumers will be expected to pay more. The changes, while in theory beneficial to consumers, will naturally result in an increase rather than a decrease in premiums in the short term. The last time the government said that one of its policies would result in a reduction of pressure on private health insurance premiums was in 2000-01. Since then, there has been a 40 per cent increase in premiums. Between 1998 and 2006, the cost of private health insurance has increased twice as fast as general inflation. Given this track record, it is unlikely that these new changes to the private health insurance regime will result in anything other than an expansion of scope of business for funds and increased costs to consumers.

Any increase in premiums is likely to result in further pressure being put on Australian households with already tight budgets. Figures show that Australian households, particularly families, are already squeezed from many directions by the government—with the average mortgage repayment consuming 32 per cent of family income and recent figures showing that childcare fees eat up as much as 17 per cent of family weekly earnings. Combined with persistently high petrol prices and the ever-looming threat of a further interest rate rise, any increase in private health insurance premiums will hurt Australian households and make private health insurance even less affordable for families.

Labor generally supports the legislation because of the obvious benefits it will afford to those Australians with private health insurance. However, we believe that, at a minimum, amendments need to be made to broaden the protection of doctors’ clinical autonomy and to provide a guarantee against further increases in premiums. I wish to reiterate that Labor is concerned about the effects that the legislation and, more importantly, the government’s decision to pursue changes to the healthcare system through the private rather than the public sphere will have on Australians who are without private health insurance. This legislation sets the stage for the creation of a two-tiered health system where access to health services will be determined by the ability to pay, not by need.

The minister made an undertaking that he would carefully consider the recommendations made by the committee and the concerns raised in the committee hearings. I urge him to consider the issues that I and many of my colleagues have just raised. Access to and the cost of health care in this country is an issue for all Australians, not just ‘consumers’ of private health insurance. The fact that the government has chosen to improve the delivery of health services through the private rather than the public sector proves that it is out of touch with the needs of the majority of Australians who do not have private health cover. Why should only those who can afford private health insurance be the ones to benefit from changes such as Broader Health Cover? Why shouldn’t every Australian have equal access to out-of-hospital and preventive health services? Once again the government has overlooked the people who are most in need of such services.