Rachel Siewert (WA, Australian Greens) Share this | Hansard source

I said ‘predominantly’ from the private health insurance industry. Their argument is that this will force people onto the already struggling public health sector and that the only way to balance the illness burden between public and private health is to continue the carrot and stick policies to force people into private health insurance. The Greens reject this position on a number of grounds. I would also like to point out that it is no wonder that the private health insurance industry is complaining. The privileged position given to them under the previous government’s position is being challenged. As the committee inquiry found, there is no conclusive modelling to gauge the impact of these measures on the public health sector—in fact, the department admitted during the inquiry that they had done no modelling of the impacts on public hospitals. We simply do not know how many people will choose to exit private health insurance. However, given that many low-income people feel they are on substandard products and that quality service is not there, I think this will also encourage people to not necessarily want to continue with those lower quality products. There are Treasury estimates and there are estimates based on modelling commissioned by the private health insurance sector. The figures differ dramatically. As I said earlier, we almost have duelling models here.

In evidence to the Senate Standing Committee on Economics, Professor John Deeble, emeritus fellow at the Australian National University and the father of Medibank, calculates that the overall impact on the public health system is likely to be an increase of approximately two per cent per annum. Others point out that those most likely to be affected by this measure are the young and the healthy, and those least likely to require hospitalisation. The fact is that it is not possible to accurately estimate the impact. As Dr Woodruff, President of the Doctors Reform Society, pointed out in his presentation to the committee, the purchase of private health insurance is not an objective, rational or measurable act; it is highly subjective. Research shows that the cost as a premium or as a tax incentive or disincentive is rated lower than perceptions of security or safety. This simply means that the removal of the surcharge will have less of an impact on people’s choices about public health insurance than their age, their general health and their perception of risk and security in general and in relation to their health and wellbeing.

We believe this debate also exposes the myth of a balanced health system, and it brings me to the principal concern of the Greens around this debate—that is, the simple fact that the 30 per cent private health insurance rebate is a direct subsidy to the industry. The Greens have long argued for an end to the Howard government’s massive subsidy to the private health insurance industry. Approximately $3.2 billion are effectively poured straight into health insurance industry pockets through this massive subsidy—$3.2 billion over 12 years could have been funding our public health sector for hospitals, nurses, better facilities and health technologies and better preventative and health promotion measures. The substantial changes introduced by the Howard government since 1966 have seen the erosion of funding to the public health sector, with a consequent massive injection of funds into the promotion of private health insurance membership. I must question in particular whether low-income people are getting better health outcomes. I would suggest that, no, they are not. We still have long waiting lists in public hospitals.

It is important to note that it was the Howard government’s policy narrative which linked the decline of private health insurance membership with the burden on the public health system and then made this the central problem for the financial sustainability of the Australian healthcare system. This concept of a balanced healthcare system has been accepted as an inarguable given, yet the evidence suggests that there is in fact no causal link. Dr Amanda Elliott, health policy analyst at the University of New South Wales, in her analysis of the changes to the health system under the coalition government, points out:

By claiming the health care system was, first, in disrepair, and secondly, in disrepair because of the weakening of Medicare through a decline in private health insurance; the Coalition constituted both the problem and the range of possible solutions.

And the solutions were, as we know, to build the private health insurance membership through a range of measures directly funding the private health sector. This has diverted resources out of the public health system and worked very effectively to create a powerful and wealthy private health insurance industry and lobby, to which we have all been subjected very strongly over the last couple of months. It has not taken the pressure off the public health sector. As extensive research illustrates, the consequences of this have been dire for the public health sector. Rather than taking pressure off the public health sector, the opposite has occurred with serious consequences for staff and patients in public hospitals. We know that the national hospital data shows that the pressure on public hospitals has not been reduced and that international research shows that there is no link between increased private health activity and reduced waiting lists in public hospitals. Indeed, Dr Stephen Duckett actually found that the more hospital care provided by the public sector the longer the waiting lists for public patients. Let me remind the Senate that Stephen Duckett is no slouch when it comes to health policy. He is an economist, who now heads the Queensland health reform team. He was secretary of the Australian health department from 1994 to 1996 and has held leadership positions in the Victorian health department and the La Trobe University, and is a chair of the boards governing The Alfred and the Brotherhood of St Laurence.

Public hospitals desperately need increased resources to provide the best care possible to attract and retain skilled staff, and to improve care and treatment options. In her evidence to the committee, Professor Leonie Segal had this to say about the impact of the private health insurance rebate:

If we were not supporting private health insurance and those dollars were available to go into health in other ways, they could be used to increase the Commonwealth contribution to public hospitals by one third.

The Greens could not agree more with Professor Segal’s analysis. The private health insurance industry makes a further argument that this measure will force them to increase their premiums because low-claiming members will drop their insurance, leaving a greater proportion of higher claiming members. They argued in response to the original bill that private hospitals will be adversely affected by a reduction in business of between six and eight per cent, and may have to close or reduce the services offered.

We do acknowledge the concerns raised by National Seniors in their submission to the committee that older Australians who are able to retain their private health insurance could bear the brunt of rising insurance premiums. If they are forced to drop their insurance, they will join the public hospital waiting lists. However, anecdotal evidence suggests that they are far more likely to maintain their private health insurance at the expense of the basic essentials of life—a great cost to their mental health and physical wellbeing. The issue here is about ensuring that there are no unnecessary or unfair increases in the health insurance premiums, that the profits of the private health insurance industry do not increase at a time when Australians are facing an economic downturn and increasingly difficult economic times.

The Greens find CHOICE’s response to the industry claims compelling. The consumer advocacy organisation CHOICE argues that the removal of government imposed incentives on people to take up private health insurance membership will shift the onus on to the industry to make their product more attractive to the consumer. This means the industry will operate in a market. The industry will have to come up with its own incentives to attract consumers rather than operating on government subsidisation, as it has for the past 11 years. And no doubt the market will help the industry to keep their premiums as low as possible.

Despite a lack of certainty about the actual impacts of these measures, there is no doubt that there is likely to be some increase in public hospital usage, and this is of course a matter of great concern to the Greens. The Greens believe that the public health sector should not carry the financial burden of measures which are intended to bring a tax measure into line with the current economic context. As I stated earlier, and my Green colleagues have argued in this place for years, the Greens believe that the public health system should be properly funded and that the billions of dollars which have been diverted from it over the past decade or more should be restored.

Notwithstanding that we will not achieve that goal here today, we do believe that if there is any impact on the public hospital system this should be compensated for by the federal government—and I made that point with the previous bill. The government have given us as a strong commitment that there will be no adverse impacts on the public hospital system as a result of this measure. We therefore seek from government an undertaking that they will in fact act to enforce this commitment that there will be no adverse impact on the public hospital system. We welcomed the previous commitment from Senator McLucas—which she gave when she previously gave a speech on this matter when she was representing the minister—that no public hospital service will be financially worse off in that event.

We will be moving amendments in the Committee of the Whole to ensure that any impact on public hospitals will be assessed by requiring for three years an independent annual review of any impact. This will give the government the necessary quantifiable data so that, if there is any adverse impact, the government will know what needs to be made up to the public hospital system. We believe it is incumbent on the government to undertake a review of the impact of this bill on the health sector generally and on the public and private sectors and the not-for-profit privately run hospitals, which will also potentially be affected by this measure. The government should ensure that an evaluation is undertaken as part of this legislation. That is why I have already circulated an amendment that calls for a review of the operation of this act. We believe that it is essential that the government are absolutely clear in their undertaking that the public hospital system will not be worse off because, if they do not, lower income Australians will be the ones in particular who suffer.

We believe that it is up to the government now to demonstrate their commitment to a strong public health system and to guarantee to the Australian community that this measure will have positive benefits for our public health system. We Greens believe that this is a small step in addressing the issues that need to be addressed in terms of a strong, viable public health system in Australia. As I said earlier, the Greens reluctantly support the new bill’s threshold of $75,000. But we are very pleased to see that the government has included indexation in this new bill, so we will be supporting it and we urge the government to support our amendment, which requires a review of the operation of the act annually for the next three years to look at any first, second and third impacts that are created by the implementation of these measures.