Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have Senator Ludwig’s second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This Bill amends the Health Insurance Act 1973 (the HIA) to enable the Minister for Health and Ageing to determine, by legislative instrument, the maximum benefit payable under the Extended Medicare Safety Net (EMSN) for each Medicare Benefits Schedule (MBS) item.

This Bill will result in savings of more than $450 million over four years.

The EMSN provides individuals and families with an additional rebate for their out-of-hospital Medicare services once an annual threshold of out-of-pocket costs is reached.

Out-of-hospital services include GP and specialist attendances and services provided in private clinics and private emergency departments.

Once the relevant annual threshold has been met, Medicare will pay for 80% of any future out-of-pocket costs for out-of-hospital services for the remainder of the calendar year.

In 2009, the annual threshold for concession cardholders and people who receive Family Tax Benefits (Part A) is $555.70. For all other singles and families the annual threshold is $1,111.60. These threshold amounts are indexed each year by Consumer Price Index on 1 January each year.

This Bill makes an amendment to the EMSN program that was introduced through the Health Legislation Amendment (Medicare) Act 2004.

At the time that Act was introduced to Parliament, the stated purpose of the EMSN was to “protect all Australians from high out-of-pocket costs for medical services provided out-of-hospital”.

We now have evidence that the EMSN is not meeting this purpose in particular cases.

As required under the Health Legislation Amendment (Medicare) Act 2004, I have tabled the Extended Medicare Safety Net Review Report 2009, a review of the operation, effectiveness and implication of EMSN conducted by the Centre of Health Economics Research and Evaluation at the University of Technology, Sydney.

The report noted the EMSN has helped patients that have very high costs and has reduced the out-of-pocket costs for some patients with cancer. Nonetheless, the review showed there are some concerns in areas such as obstetrics, Assisted Reproductive Technology (ART), including IVF and other Medicare services.

The report noted that around 50% of EMSN benefits are paid for obstetrics and ART, and that Medicare benefits have more than doubled for both of these groups since the EMSN was introduced and a significant proportion of this increase in expenditure is because of increases in the fees charged.

The review noted that between 2003 and 2008, the fees charged by obstetricians for in-hospital services reduced by 6%, whilst the fees charged out-of-hospital increased by 267%.

Similarly, the fees charged for ART services fell by 9% for in-hospital services, whilst the fees charged for out-of-hospital services increased by 62%.

This indicates that some doctors are taking advantage of the EMSN as their fees for out-of-hospital services have increased far in excess of the fees that they are charging in-hospital patients.

Before the introduction of the EMSN in 2004 there was a limit on the amount of the Government contribution for Medicare services – that is the Medicare Schedule fee.

The EMSN fundamentally changed these arrangements by essentially removing this limit by covering 80% of out-of-pocket costs for out-of-hospital services, regardless of the fee charged by the doctor.

The unlimited nature of the benefits available through the EMSN has led to some doctors taking advantage of the EMSN to increase their fees with the knowledge that the majority of the cost will be funded by the Government.

This has had the effect of increasing the fees being charged to many people for some services, thus increasing the cost for those people that have not qualified for EMSN benefits, as well as the cost to the Government.

The EMSN benefit is for the patient. It is not intended to subsidise the fee increases of doctors.

The review identified that for some Medicare services with high out-of-pocket costs, the EMSN benefit is not going to its intended purpose. For these services, the review found that for every EMSN dollar that is paid, 78 cents was spent on meeting doctors’ higher fees, rather than reducing patients’ out-of-pocket costs. Services in this category include one type of varicose vein treatment, one type of cataract surgery, injection of a therapeutic substance into an eye and some ART services.

This Bill will enable the Minister for Health and Ageing to determine the maximum benefit that will be paid under the EMSN.

The level of the EMSN benefit cap for each selected item will be set out in a legislative instrument. It is necessary for the level of the EMSN benefit cap to set be out in a legislative instrument to allow the Government to be responsive to changes in circumstances that impact on the EMSN. This instrument will be a disallowable instrument and therefore subject to parliamentary scrutiny.

For the benefit of the Parliament, I am tabling the draft legislative instrument and the draft explanatory statement that I intend to introduce as soon as the Bill is passed.

It is important to note that the EMSN benefit caps for artificial reproductive technology (ART) are based upon the current MBS item structure. These items will be restructured to align the Medicare items with the phases of treatment in an ART cycle and spread the cost for ART across the treatment cycle. Once this restructure is finalised, the new caps will be introduced through a second instrument.

The items that will be ‘capped’ under the measures announced in the 2009-10 Budget are obstetrics, ART services, hair transplantation, the injection of a therapeutic substance into an eye, one type of varicose vein treatment and one type of cataract surgery.

This measure also includes funding to increase the MBS rebates of 15 obstetrics services at a cost of $157.6 million over four years, which will assist patients with their out-of-pocket costs.

The Government will also be investing $120.5 million over four years though a maternity services reform package to provide greater choice for women and support the affordability of midwife services.

EMSN benefit caps will also apply to midwife services to ensure consistency in the treatment of Medicare funded maternity care.

The EMSN benefit cap will apply to the individual MBS items and would be payable in addition to the standard Medicare rebate.

Each person will be eligible to receive up to the EMSN benefit cap each time that they receive that service. A different level of EMSN benefit cap can apply to different MBS items. The EMSN benefit cap would be a dollar value, for example, an EMSN benefit cap of $100 may apply to one item, and an EMSN benefit cap of $500 may apply to a different item. The level of the EMSN benefit cap will be publicly available. This will ensure that doctors and patients will have certainty in relation to their Medicare entitlements.

Every person is still eligible for an EMSN benefit.

All services currently covered by the EMSN will remain covered by the EMSN.

The total out-of-pocket costs incurred by the person for these services will still count towards the EMSN threshold amount.

Once a person has reached the EMSN threshold, they will continue to be eligible to receive EMSN benefits equal to 80% of their out-of-pocket costs for all other EMSN eligible services.

This maintains the Government’s commitment to retain the EMSN for all out-of-hospital Medicare services.

In 2008, expenditure on EMSN was $414 million, 30% more than in 2007. Unless we make changes now, this expenditure will continue to grow rapidly.

This Bill creates a mechanism by which the Government can responsibly manage expenditure on EMSN. This is important for supporting the sustainability of the EMSN so singles and families can continue to receive this additional assistance with their out-of-pocket costs.

Debate (on motion by Senator Wong) adjourned.