Nick Xenophon (SA, Independent) Share this | Hansard source

The Fairer Private Health Insurance Incentives Bill 2009 and related bills if passed will affect all Australians and their access to health care. Around 11 million Australians currently hold some form of private health cover, giving themselves peace of mind should they require hospital admittance or ongoing medical treatment and making it more affordable to access health services such as optometry, dental care or physiotherapy—to name a few. However, private health insurance can be costly for the average Australian family. For a family, for example, it can cost a few hundred dollars per month to have hospital and general treatment cover. But many would argue it is money well spent. What makes private health insurance accessible and affordable for many Australians is the 30 per cent rebate. Since the introduction of the rebate and other measures, the uptake of private health insurance rose from 30.4 per cent of the population to 44.6 per cent. The fact of the matter is that, without the 30 per cent rebate, most Australians on the average salary would struggle to afford private health insurance, especially during these difficult financial times. Unfortunately, though, health is something that one cannot afford not to take seriously, so almost half the population do what they can to budget for their own and their family’s private health insurance.

Based on data from the Australian Bureau of Statistics, one million Australians with private health cover live in households with an annual income of less than $26,000. But, if things are difficult now with the 30 per cent rebate, imagine how much harder it will be for the average Australian family to find the extra money if these bills are passed. The government suggests that the impact would not be great. It argues that private health insurance is at its highest level since March 2002 and that, during the period of March 2007 to March 2008, there was an increase of 225,000 people in private health insurance. Further, it points to figures released in July that Australian private health insurance membership was at record levels at the end of the June quarter. The government points to these as an indication of a steady increase in private health insurance, despite the recent changes in relation to the Medicare levy surcharge. The proposed changes were modified as a result of compromise and negotiations with the government, and the impact would have been much greater had the government’s original plan gone ahead without amendment by the Senate.

It is important to note that the data on which these claims are based were sourced prior to the end of the full financial year, which would have excluded the full impact of the Medicare levy surcharge changes. Indeed, figures released one week later by the Private Health Insurance Administration Council show that the annual growth in privately insured Australians has fallen to its lowest levels since 2006. Since the announcement of the changes to the Medicare levy surcharge in May 2008 the number of Australians taking up private health cover has steadily decreased, month by month. If we look at yearly comparisons between June 2007 and June 2008, 389,000 Australians took up private health cover. However, following the changes to the Medicare levy surcharge, just 211,000 Australians took up private health cover. There may have been other factors, but clearly it was a factor.

The Australian Health Insurance Association forecasts that up to one million Australians will abandon or downgrade their cover as a result of the changes proposed in this bill. The AHIA figures predict that 240,000 Australians will cancel their plans wholly and a further 730,000 will likely downgrade their cover to the bare minimum. The number of Australians who will downgrade their health insurance to just basic ancillaries, so that they will maintain a level of health insurance but be unaffected by the changes to the Medicare levy surcharge, is concerning. This will be a hidden statistic and one that will greatly impact on our already struggling public health system.

Drawing again on the AHIA analysis of Roy Morgan data, the projected impact of these changes from the 2009 budget are: firstly, an extra 189,771 bed days for public hospitals at a cost of over $195 million; secondly, over 4.3 million fewer services covered in allied healthcare due to dropouts; and thirdly, a fall in funding of dental services of 1.8 million at a cost of around $99.3 million. Given my ongoing discussions with the health minister on funding for dental care for Australia, I would urge the Senate to reconsider that because I think with some modifications the government’s plans for dental health are preferable to the status quo for acute and chronic care—