Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

Medibank is Australia's largest private health insurer. It has approximately 3.9 million members through its Medibank and ahm brands. And since at least 1 January 2012, Medibank had agreements with many pathology and radiology providers who supply services to hospital patients. These services include blood tests, X-rays, CT scans and MRI scans—things we all use. Under these agreements, in situations where these providers charged above the Medicare Benefits Schedule, the MBS, fee, Medibank paid charges above the MBS fee, the gap, on behalf of Medibank and ahm members. Suddenly, from 1 September 2014, Medibank terminated or phased out these agreements. As a result of the agreements no longer being in force, since 1 September 2014 Medibank and ahm members have not been completely covered for in-hospital pathology and radiology services and have had to pay the gap as an out-of-pocket expense.

The changes have been estimated to have saved the company up to $24 million, and many customers became aware of the changes once they were admitted to hospital. The company braced itself for 'challenging calls'. The Medibank consumer guide from 2013 stated that it would inform customers of any policy changes in writing but failed to do so when making the $24 million worth of alterations. The guide said:

If we make changes that affect your cover in a detrimental way, we will let you know in writing prior to the changes taking place.

In our first set of hearings, there were a large number of private health insurance companies, including their peak bodies, who did make themselves available. Medibank Private was not available for that hearing, and I understand that arrangements are being made for them to present themselves at a later date. In addition, I want to note that it has become very difficult for the Senate committee to get to the bottom of its work on the prosthesis list when every single, major private hospital provider had made themselves unavailable for those hearings.

I also want to note the two largest private hospitals groups—the Ramsay group and the Healthscope group. In private comments to journalists, the Ramsay group repeatedly made an insinuation that the committee had not properly invited them to attend the hearings. Let me just say unequivocally that is false. There were repeated phone calls. There was repeated contact. There was correspondence that had been sent from the committee to Ramsay Health. Again, they would never put their name to it, but to try and spin in the media that they had not been properly contacted is a very improper insinuation about the professionalism of the Senate committee. Frankly, I think it is a matter that the committee may make a decision to address at a future point in time.

The idea that you can have a proper discussion about private health insurance costs and, in particular, the prosthesis list, without having the private hospital chains present is very difficult. I want to explain that the prosthesis list represents only 14 per cent of private health insurance expenditure for hospital cover policies compared to hospital benefits, which comprise 70 per cent of the costs, and the medical service benefits, which comprise 16 per cent of the costs. Given the government provides private health insurance companies with $6 billion in terms of the rebate, one could say indirectly—and it is indirectly—that the private hospitals are getting up to $4.2 billion out of it by the fact that they represent 70 per cent of the cost. Over the last nine years, the average prosthesis list benefit grew by four per cent, the average medical benefit grew by 17 per cent and the average hospital benefit grew by 38 per cent. I want to note that that in part does reflect the fact that some of the prosthesis prices, prior to that 10-year period, did have a sudden rise themselves. ABS data shows that over the past 10 years the average health CPI rise has been 4.6 per cent per year—again, a very, very high level of growth that is making it incredibly expensive for health providers. While that has been happening, the CPI for hospital and medical services over the past 10 years has risen by 6.2 per cent.

This is an important issue that the Senate is dealing with. It is an important issue that we need to get to the bottom of. Rising healthcare costs—a component of those being the increases that many families have been paying year in, year out on private health insurance—is a matter that, frankly, this Senate has demonstrated we can tackle in a nonpartisan way. The public has a right to know, and the public deserves to know, when the sum of money involved in supporting this industry in the next year is forecast to be $6.2 billion of taxpayer funds. Again, if we accept in a bipartisan fashion that it is an industry that warrants support, then we should be asking some tough questions about how we drive down those costs.