Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Hansard source

Thank you, Senator Watt. And that's only fair given wages are so low and private health insurer profits are so high. We are shifting the balance back to ordinary Australians. Large insurers are highly profitable and have the capacity to absorb these savings. For decades, Australians have been getting whacked with price rises double or even triple inflation. So Labor will also task the expert Productivity Commission with the biggest review of the industry in 20 years to improve the quality, value and affordability of private health insurance. The Productivity Commission is the most appropriate organisation to consider questions of competition and provide recommendations to strengthen the sector. Labor will immediately begin consulting with the sector on terms of reference, which will include how to restore the affordability and value of private health insurance for consumers; the underlying cost drivers, including insurer margins; the range of carrots and sticks to encourage insurance coverage; the balance between the private system and Medicare, Australia's universal public health insurance scheme; and issues arising from sector consultation.

There's broad support for this inquiry, including from the Consumers Health Forum, CHOICE, the Australian Healthcare & Hospitals Association, the Public Health Association and the National Rural Health Alliance, who've already called for a Productivity Commission inquiry into private health insurance. The commission's report will provide the basis for ongoing reform under a Shorten Labor government, with long-term reforms to improve the affordability and value of private health insurance to be implemented in Labor's first term. And there is wide support for our policy by consumer groups. The Public Health Association of Australia has said:

Scare tactics by the Private Health Insurance industry … should not be surprising. However, they should be rejected out-of-hand. The focus of this industry is on profits and return to shareholders rather than the health of all Australians.

The highly respected consumer organisation CHOICE has said:

CHOICE welcomes any action to apply more scrutiny to this highly subsidised and highly profitable industry … While costs for private health insurance are increasing, the value that people receive from private health insurance has dropped.

Similarly, the Consumers Health Forum has said:

A commitment by the Opposition to a wide-ranging Productivity Commission review of the private health system is a welcome step and a level of independent inquiry we have been recommending for some time.

The Australian Nursing & Midwifery Federation is also supportive, saying:

… the ANMF is supporting practical policy reforms which enhance the affordability and value of private health insurance … "fees for private health insurance cover are out of control and now becoming unaffordable for most families."

And, finally, the Australian Healthcare and Hospital Association has said:

A comprehensive review of private health insurance by the Productivity Commission, as put forward by the Opposition today, is the only sensible way forward out of the mess that private health insurance has become.

So it's pretty clear that Australian families need relief and that the system needs to be tidied up.

All this is clearly unsustainable. We've seen people abandoning their policies in droves because they just can't afford them anymore, and if enough people leave it will put the whole industry at risk. Labor's policy would deliver the smallest price rises in decades. More than that, Labor's policy would deliver much needed certainty so that Australians could plan their household budgets around these more modest increases—no more February surprises when your insurer informs you that your premium will rise by five or six per cent on 1 April.

We believe that private health insurance plays an important role in Australia's world-class health system. We're not looking to dismantle it but this is an industry that gets $6 billion in taxpayer subsidies every year, so Australians are entitled to demand a better deal. In contrast to Labor's bold plan, the package the government announced in October last year was pretty underwhelming. After two years of talking, the best the government could come up with was a range of mostly minor changes. They're really only tinkering around the edges. This isn't surprising, given how closely the government collaborated with the private health insurers on devising this package.

We also have significant concerns about elements of these bills. Firstly, the bills allow insurers to offer maximum excesses of $750 for singles and $1,500 for families. This is up from $500 and $1,000 presently, so the government is trading higher excesses for lower premiums. But we're concerned that consumers will opt for higher excesses that they cannot afford to pay when the care is needed, thus forcing them into the public system and further eroding the value of private health insurance.

The bills also allow insurers to offer age-based discounts to young people, requiring amendments to the Age Discrimination Act. Insurers will be able to discount hospital cover premiums by two per cent for each year a person is aged under 30, up to a maximum of 10 per cent. Labor fears this will not only be an insufficient incentive for individuals to take out private health insurance but will also be expensive for insurers, possibly increasing premiums for others. Under these changes, a young person signing up to an average $1,800 policy will only save around 70c a week, so they won't even get a cup of coffee a month out of it. But the changes also undermine the important principle of community rating, under which policyholders are supposed to pay the same premium for each product, regardless of their age, health status or other characteristics. This hints at an Americanised model that would not be welcome here in Australia.

The bills will allow insurers to terminate products and transfer all people covered by those products to new policies, but the government has released disturbingly little information on how this change is supposed to work. The Senate Community Affairs Legislation Committee undertook an inquiry into these bills, and Labor senators supported the committee's recommendation that the bills be passed. But these bills do little to address the affordability crisis in private health insurance, and we call on the government to adopt Labor's policy of capping premium increases at two per cent for two years and tasking the Productivity Commission with the biggest review of the sector in 20 years. Sadly, the government and insurers are putting profits before patients.

Private health insurance is a very important part of Australia's healthcare system, and it always will be. But under the Abbott-Turnbull-Morrison-whoever government, a private health insurance crisis is putting undue pressure on family budgets and on our healthcare system. For private health insurance to deliver value, it needs to be affordable for working Australians. The last Labor government scrutinised every dollar in premiums, with lower average increases than under the Liberals over the last 15 years. The last Labor government also responded to evidence that the private health insurance rebate was growing unsustainably and overwhelmingly benefitting wealthy Australians.

Labor's reforms made the rebate fairer for working Australians and sustainable for taxpayers, while continuing subsidies for singles earning up to $140,000 and families earning up to $280,000. Only Labor is choosing to put Australian families first instead of the interests of the multibillion-dollar private health industry. It's just not good enough from those on the other side.