Stirling Griff (SA, Centre Alliance) Share this | Hansard source

I rise today to comment on the government's response, tabled outside of sittings last December, to the report Value and affordability of private health insurance and out-of-pocket medical costs. First, it has taken a full year for the government to respond to this very important inquiry. This is surprising when you note that the report was supported by the majority of committee members, that there were no dissenting reports and that governments senators only provided additional comments to the report.

Inquiries and their resultant recommendations are undertaken to inform the parliament, and particularly the government, when there is a breakdown in service provision or delivery, or a need to improve regulations or legislation for the betterment of the community. It is our duty as elected members of parliament to pay attention to their findings and to act on them where appropriate. Reports are not meant to gather dust in a minister's office or to be brushed off with a simple 'The government notes these recommendations,' which, as we all know, usually means no further action will be taken unless there is pressure to do so. This government's response to these recommendations is very much in the 'brushed off' category, despite the government's initial work to reform private health and its embryonic effects on fee transparency.

Before I refer to some of their responses, it's important to note that, as a policy area, both parties over recent years have done very little to rein in the ever increasing costs of private health. Private health insurance premiums have increased by an average of 5.35 per cent since 2000, more than twice the rate of CPI and almost double that of wage growth. Government spin claims that in the past two years premium increases have been the lowest in a decade. I accept that claim on face value, but point out that the increases are still more than double that of inflation and wage growth. In other words, government has, through regulated increases, actually sanctioned increasing the cost burden of private health insurance on ordinary Australians. No wonder so many Australians are dropping out. The level of downgraded cover and dropout numbers is the highest we've seen in a decade, and this has occurred at a time when many insurers enjoy record profit margins, some with returns on equity that are more than double those of the banks. One of the largest insurers, Bupa, is even on the ATO list as a significant risk for tax evasion from transfer pricing. What does that tell us? It tells us that, irrespective of what we are told, private health insurance for some is a licence to print money. The opposition also has failed to grasp the opportunity for significant reform. Its approach—to cap premium growth to two per cent a year—will only lead to insurers closing unprofitable policies and further drops in the level of cover. Nothing good will come from their cost reduction method either.

The inquiry heard from insurers, hospitals, clinicians, patients, community groups and the Department of Health. It found glaring problems with anticompetitive behaviour by the large health funds with respect to individual providers. It found many private hospitals enjoy record net operating margins of 10 per cent or more. And it found that there had been no effort from either the government or the opposition to bring the private hospital system under the watchful eye of the Independent Hospital Pricing Authority.

The inquiry also heard that 70 per cent of costs associated with private health are spent on private hospitals, with doctors and prosthesis costs each representing just 15 per cent. The health minister's response to this report failed to make even a single statement regarding improving the efficiency of private hospitals. Private hospitals have enjoyed record profit margins, with Ramsay Health Care, the largest operator, having increased its share price 25 times over the last two decades—what a stellar record, very much at the expense of the privately-insured public. Day surgery, which is the largest growth area for private hospitals, has net operating margins—just think about this—of 20 per cent. Yet the government has chosen not to accept the recommendations of the inquiry that private hospitals and day surgeries should also be included in the Independent Hospital Pricing Authority's analysis of hospital pricing. What is the government frightened of? What is the opposition frightened of? Upsetting donors or future employers or future consultancy opportunities? It does make you wonder, when no action is being taken against the category that represents the biggest costs yet the highest profits.

Now, to some of the specific recommendations. Recommendations 2 and 3 of the report relate to transparency, requiring private health insurers to publish rebates by policy and item number, and for the Department of Health to publish medical practitioner fees in a searchable database. Transparency was very much a key outcome of the inquiry and this is an area that I am focused on more broadly. Improving transparency of medical costs, practitioner performance and health outcomes is ambitious yet vital. It is potentially the biggest game-changer for consumers. When it comes to fees and gaps, consumers are confused and find it difficult to determine benefit levels in an easy, understandable way. Medical practitioner fees vary substantially and are often not fully known until a patient receives their bill. Late last year the government received recommendations from the ministerial advisory committee on out-of-pocket costs, which was tasked with modelling ways to make out-of-pocket costs transparent for consumers. However, it has yet to publish these recommendations, much less act on them. The government has dodged the issue of publicly publishing policy benefit rates by using commercial-in-confidence excuses—what a cop out. The PHI funds are backed by $6.3 billion in taxpayer-funded rebates. There should be no excuses for failing to clearly state what rebate is paid for each item number and outed on a publicly searchable website.

Recommendation 4 of the report relates to auditing the much-trumpeted reduction in the prosthesis list cost to ensure savings have indeed been passed on to consumers. The government's response is that it supports this in principle, but there is no pathway or commitment at this stage to on act it. Recommendation 11 covers paediatric dentistry. The committee heard from paediatric dentists about the issues associated with providing dental care in hospitals for children requiring anaesthesia and sedation. The government states this is a strictly private commercial arrangement and has lost sight of the fact that this is a failed market, where all the power is on the side of the insurers.

Recommendation 12 seeks to prohibit the practice of differential rebates for the same treatment—that is, where a consumer is paid a different rebate according to where they live or where their procedure was undertaken. This is despite the fact that they pay the same premium as everybody else and that the same insurance product is what they have taken. The government states:

Consumers are free to choose a private health insurance policy that pays a set benefit regardless of provider, and many insurers offer such products.

What it ignores is the fact that there is no one location for consumers to discover what insurers offer.

Recommendation 17 was mirrored in the dissenting report by government senators. It relates to a reasonable period of notice for policy changes. By rejecting this recommendation, the government has chosen to leave consumers at the mercy of insurers, who can change their policy and coverage with as little as 60 days notice, leaving consumers who have commenced or have planned to commence treatment floundering. This is a poor position for consumers, and one I and the committee would have thought would not have been strongly supported by government.

All-up, out of the 19 recommendations, government agreed to just five, or a little over a quarter. It outright rejected a further five and noted a further nine, which likely means no action will be taken on them. This was a very important inquiry, and I sincerely implore this government or the next to review and reconsider the recommendations which have been noted or rejected, to ensure the public receives the best possible, most affordable and most transparent private health care possible.