Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Hansard source

The minister has just demonstrated the fundamental problem with this government. They do not think things through. They do not know that an action over here has a flow-on impact on a whole range of other levels. I was very interested to hear the minister say that somehow he knows what the behaviour is of the 330,000 people that choose not to take out private health insurance—as to whether they would access hospitals or not. But he knows for sure that people who do take out health insurance will not use them. Let me just try and clarify this. Minister: do you perhaps concede that people might not take out private health insurance because they do not expect to need access to hospitals in the near future? I put it to you, Minister, that people who are most likely to require access to public hospitals would much rather have the peace of mind of being covered by private health insurance. The government cannot have it both ways. They are trying to tell us that they know for sure that the 583,000 people that will leave private health insurance would not have accessed hospitals anyway. But the 330,000 people are the ones that are accessing public hospitals for sure! How do you know that? Have you done some modelling to ascertain that?

I will just try to explain this very carefully again. The minister says the 583,000 people who will leave are young and healthy and will not need access to public hospitals. But, Minister, what about the $2.9 billion in funding that they will take away with them? Just listen to what former Senator Graham Richardson said in 1993. He was talking about all the funding that the people who leave private health insurance would take with them. I will read from this quote again. It is from an opinion piece in the Canberra Times on 21 December 1993. He talks about the 2.2 per cent who drop private health insurance every year. In those days, that meant $85 million worth of private health insurance contributions was being lost to the national health budget. That is the crux of the matter. I am using your figures, Minister. The figures provided by Treasury in the budget show there would be $960 million in savings. The figures provided now, under this revised bill, show that your government expects to save $879 million because it will no longer have to pay the rebate to those whom it expects will leave.

If that is what the saving is made up of, that is only 30 per cent of the total funding for hospital treatment that has been lost to the system. If you extrapolate: if $879 million is 30 per cent then $2.9 billion is 100 per cent. Through this measure, you are taking $2.9 billion out of the health system—and replacing it with what? There are two things you can replace it with. Either you cost-shift to the states and territories, and force them to cover the additional demand that will be coming their way, or there will be significant increases in private health insurance premiums. You cannot take $2.9 billion out of the health system with no impact whatsoever. That is the core problem with this legislation. You did not do your homework. You did not ask Treasury and the Department of Health and Ageing to do a proper assessment of the flow-on implications. You should have had a read of the private health insurance reform discussion paper that former Senator Graham Richardson circulated towards the end of 1993, because all of the problems you will face as a result of this measure, if it were to be successful, are outlined there in black and white, in very eloquent detail. I am sure that you would remember former Senator Graham Richardson well. He had a knack for saying things the way they were.