Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Hansard source

Mr Rudd, in a press conference on 25 February 2008, said:

The private health insurance rebate policy remains unchanged and will remain unchanged.

Ms Roxon told The Age on 24 February 2009:

The Government is firmly committed to retaining the existing private health insurance rebates.

It goes on and on. This indication that was given repeatedly by members of the Rudd and Gillard governments in relation to private health insurance turned out to be untrue. It is like many things that have happened in recent years pertaining to both the Rudd and the Gillard governments—fabrications, lies, to the Australian people. Here we have yet another broken promise in relation to health insurance.

Those opposite perpetrate the lie that private health insurance is for the rich. Some 5.6 million people with private health insurance have an annual household income of less than $50,000, 3.4 million have an annual household income of less than $35,000 and 10.7 million Australians have hospital cover. The government's changes to private health insurance are already having an effect. The government's own Private Health Insurance Administration Council, PHIAC, has found that in the five years to 2012:

… exclusions and restrictions have become much more prevalent.

…   …   …

… the increased use of exclusions may … work against the policy objective of private health insurance in easing the burden on public hospitals.

The full effect of Labor's means-testing changes has not yet been felt, with PHIAC reporting $1.2 billion in prepayments in the June quarter as people tried to defer the resulting premium increases. Many policyholders prepaid for 12 months or more, thereby delaying the pain of Labor's cuts.

Labor's private health insurance changes will put more pressure on public hospitals, which are already struggling under the $1.6 billion cut to hospital funding in Labor's MYEFO. This includes retrospective cuts to public hospital funding that has already been spent and allocated in 2011-12 and 2012-13. It has caused the closure of public hospital beds and operating theatres and delays to elective surgery. The government has since announced a reversal of its position, but of course only for Victoria and only under pressure.

Federal Labor has spent approximately $1 billion establishing nearly 12 bureaucracies which appear immune to cuts while funding has been slashed from private health insurance, public hospitals and dental health through the closure of the Chronic Disease Dental Scheme. The changes to Lifetime Health Cover in this bill will increase premiums by up to a reported 27.5 per cent on 1 July 2013, and of course this will directly affect lower income Australians.

Presently, the lifetime health cover loading is removed after 10 continuous years of hospital cover. Once again, the government is changing the rules of the game on ordinary Australians. There will be people who are close to having their leading removed, having paid the loading in good faith and abided by the appropriate rules and regulations. Now, they may be slugged with a 27 per cent increase in premiums and forced to drop their cover. The change will add extra complexity to the private health insurance system. The means-testing changes already created around 12 different pricing structures for premiums. Changes to the lifetime health cover will further increase the administrative burden on private health insurers with short time frames to change systems by 1 July and that is next week. The previous coalition government's private health insurance reforms, in the form of the rebates, the Medicare levy surcharge and lifetime health cover, saw the number of people with private health insurance increase 75 per cent, from 6.1 million to over 10.7 million people. The bill also ceases direct claiming of the private health insurance rebate through the Department of Human Services known as the incentive payment scheme. This is also to take effect on 1 July this year. The coalition acknowledges that very few people access the rebate through the scheme—99.9 per cent of rebate claims are said to be made by the premium reduction scheme or through tax offset claiming. It is claimed that this will reduce the administrative burden for the Department of Human Services, insurers and the Australian Taxation Office. The coalition supports private health insurance. This bill, which was introduced by the government last year and considered by the coalition then, adds more complexity to private health insurance and will raise premiums, including for those Australians on lower incomes. The coalition does not support the lifetime health cover component of this bill and we will be moving an amendment to oppose the lifetime health cover component.

I now turn, in the limited time available, to consider the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013. Of course, the government is rushing this bill through the parliament. It was introduced on 15 May and debate began on 27 May. The government has brought on debate without giving the opposition time to consider it properly through the normal processes. Of course, once again Labor is playing tricky politics by listing this bill in cognate with one introduced last year. Labor is trying to hide from responsibility for the terrible decisions that have been forced on Australians due to years of wasteful and reckless spending. The Australian public know that this Labor government, whether it is under Ms Gillard or under Mr Rudd, in a few short years has turned $70 billion in net assets and a $20 billion surplus into rolling deficits and debts now pushing through the government's own $300 billion debt ceiling. Due to Labor's economic incompetence, started under Mr Rudd and continued under Ms Gillard, there is now a budget emergency.

Despite some objectionable cuts being implemented, the parliament does not need to consider all new legislation in the context of Labor's dire fiscal reality as outlined in this chaotic budget. The coalition acknowledges that there are serious concerns with this latest Labor bill, including that this change will increase the cost of private health insurance further for all Australians with cover irrespective of age or income; the effect of this change will not be felt by individuals or the health system for some time as it will not commence until April 2014; the effect of the government's cuts from means-testing changes have yet to be felt, with over $1.2 billion in premium prepayments in June 2012 as people sought to avoid the financial consequences for one financial year or more; and of course, like many, many other bills that have been rushed through in this session, this bill adds more complexity to the private health insurance system.

Unfortunately, this parliament cannot undo all Labor's bad decisions and wasteful spending immediately. The coalition will not be opposing these bills. Before I conclude my comments in relation to these bills, I want to refer in particular to additional comments made by coalition senators in the Senate inquiry. They stated that this is the third significant change to private health insurance that has been proposed by both the Rudd and Gillard governments. The coalition senators referred to means testing provided for in the Fairer Private Health Insurance Incentives Act 2012 and related legislation. That is the only measure that has been implemented to date.

In relation to the means-testing change, the Private Health Insurance Administration Council found in The operations of private health insurers annual report 2011-12:

In response to the reform, many insurers promoted prepayment options to maximise their customers’ opportunity to claim a rebate in respect of premiums paid. As a result, policy holders were able to ‘lock in’ premiums for up to the specified prepayment period, which saw prepaid premiums increase by $1.2 billion.

…    …   …

… the impact on policy holders’ choice in respect of cover will emerge as prepayment periods end.

Coalition senators agreed with submissions that detrimental effects on coverage rates and the level of cover caused by the means-testing changes and the subsequent proposed changes included in the bill will not be known for some time. Current trends in private health cover do not accurately reflect the impact of changes that have been deferred through prepayments and others that have not yet been implemented.

When you look at the consequences of these bills—as coalition senators pointed out—one is likely to be an increase in the cost of obtaining private health insurance to consumers, as is noted in the explanatory memorandum. Of course it will affect people with private health insurance, irrespective of age or income. As was noted by a number of organisations that made submissions, such as Medibank Private, HIRMAA and National Seniors Australia, there are particular concerns about the long-term consequences and in particular those for older Australians who are on fixed or lower incomes.

Coalition senators shared in their dissenting report the significant concerns of a wide range of stakeholders regarding difficulties in implementation associated with this measure and how the bills would add significant complexity to the administration of private health insurance and the associated cost for insurers. Coalition senators urged the government to give more detailed consideration to alternative measures provided to the committee that could mitigate the administrative burden and implementation complexities associated with these bills.

Just by way of example, there was an article in the Daily Telegraph of 17 June 2013 entitled 'Tax-time fright for health insurance'. The article referred to the 400,000 Australians about to face big tax debts because they have not told health insurers that they are no longer eligible for the government rebate. The article refers to a double whammy that these households will face because they will be hit with a premium surge of as much as 42 per cent when they do stop claiming the offset. The article refers to polling by Galaxy Research as to the numbers of people who will likely be caught out. They found that 22 per cent caught in the means test had no awareness of it. This equates to 392,000 people. The articles states:

… the number who could face a debt may be even higher because a further 25 per cent did not know what difference it would make to their tax return.

'This means that almost half of the 1.7 million Australians on incomes captured by the means test could be in for a surprise come tax time,' said Galaxy's research director Peter Matthew.

Then there is the story in TheAdvocate of 26 June 2013. It quotes pensioner Richard Peters as saying that he will be forced to pay around an extra $1,000 a year for private health insurance under proposed government changes. For a pensioner like Mr Peters, this means paying an extra $18 a week. The article says:

'The loading will differ from person to person, but I'm 74 and that is a difference of $937,' Mr Peters said.

'With the rates and everything else going up, it's just another cost.'

Mr Peters said once the change went into effect, it would result in more people turning to the public health system.

'It will just blow out the waiting list again,' Mr Peters said.

That is a practical example of a pensioner. And I am sure that there are many, many people like Mr Peters out there.

I remind the Senate that organisations like Private Healthcare Australia have consistently warned that Labor's legislative changes to the private health insurance rebate will increase premiums for all Australians and force people onto the public hospital lists. Changes to the private health insurance rebate will hurt those Australians who need it most. I will reiterate the figures: 3.4 million people with private health insurance live in households with incomes less than $35,000 per annum and 5.6 million people with private health insurance cover reside in households that have a gross annual income of below $50,000. For the 12.5 million Australians with private health insurance, this will no doubt have a major impact.

As Mr Peters outlined in the article that I quoted, he will as a pensioner be facing paying an extra $18 a week. We know that for someone on a pension that is a sizeable amount. As we know, many older Australians will be affected and have already been affected by the changes in private health insurance. As shadow minister for ageing, many older Australians say to me that it is vitally important for them to hang onto their private health insurance. For many of them, it means forgoing other things just so that they can hang onto it. They do not want to be foisted onto the public hospital system, because the public hospital system will not be able to meet their needs or requirements. As a consequence, hanging onto private health insurance is vitally important for them. As I have indicated, the coalition will be moving an amendment to the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012.