David Pocock (ACT, Independent) Share this | Hansard source

I rise to offer a brief contribution on these health bills and on the topic of private health insurance more generally. As Senator Scarr has pointed out, we do have a health system that is a mix of public and private health care. Our tax system actively incentivises many Australians to hold private health insurance. In fact, from the most recent statistics that I can see, well over half of us now have private health insurance. That number has been growing since the pandemic. People obviously value their health and they are taking up private health insurance.

Given these incentives and the potential extra tax for not having private health insurance, I feel that we as a parliament have a duty to ensure that the system is working efficiently and is delivering the care that Australians need. The system clearly has its challenges. A range of commentators have expressed various views, but it's really important that we remember this is affecting the lives of Australians. People feel the effects when the system, whether it is private or public, doesn't work for them. This is something I hear a lot about from my community here in the ACT. People are frustrated with what they see at times as a lack of value. I'll give you one example.

I recently heard from a gentleman living in the south of Canberra. He had been to have a treatment at a prosthodontist. It cost him $1,500. He was reimbursed just $57 by his fund, despite having paid, he estimates, around $47,000 in premiums over the last 15 years. I don't claim to know the specifics of this case and the level of coverage he had, but it's hard to see that this gentleman received value for his investment in this specific interaction. For the last 15 years he has been paying over $3,000 and is out of pocket $1,400 for a procedure.

Each year the ACCC delivers to the Senate a report highlighting some of the key trends in private health insurance. I thought I would highlight some of the figures that stood out to me in their 2020-21 report. The average gap expense for hospital treatment increased by 9.5 per cent on the previous year. It has increased by 23 per cent over the last five years. Private health insurance management costs have increased by eight per cent, or about $200 million. That's an extra $200 million in salaries, management costs and bonuses. At the same time, the number of exclusionary policies grew by 150,000 policies or around 4.6 per cent. According to the ACCC, this is part of a long-term trend which has seen the number of policies with exclusions grow from 28.7 per cent in 2012 to 61.3 per cent today, which is likely a function of people cancelling top cover and opting for low-cost, basic policies to avoid the added tax expenses. However, in some good news, the industry appears to be making good on their promise not to profit from the pandemic and has reported returning a total of $2.1 billion to consumers up to 30 June last year.

It's also worth noting that premium increases have generally been lower over the past couple of years—certainly lower than inflation. However, the cost of living is really hurting Australians at the moment, and every percentage point matters. From the insights delivered by the ACCC, it's clear that the system is just not working as hard as it can for patients. It can work harder. That brings me to these prostheses benefits that are the topic of the bills before us today. I've spent a number of weeks delving into this legislation and some of the complexities. I can report that it is, indeed, a complex area of policy. It's a system that seems to be quite precariously balancing a number of interests.

Last year, the government entered into a four-year agreement with the medical technology industry to drive savings on prostheses benefits. Prostheses benefits will now reduce over the next four years and will be aligned with public sector prices. However, the prices won't be able to fall below a seven per cent floor; they will have to be seven per cent higher than in the public system. It should be noted that the ACCC has raised some concerns with these arrangements in their report:

While the ACCC welcomes efforts to reduce the underlying cost of prostheses, the ACCC notes that the MoU's floor on prostheses benefit reductions is likely to have some distortionary impacts on prices for medical devices in private healthcare.

I understand this is a complex system and there are many different factors to take into account. In some instances, it's very hard to compare what's happening in the public system with the private system. But, putting that aside, these savings that have been committed to—around $900 million, almost a billion dollars of savings on the table over the next four years from the medical technology industry—should be delivered to consumers.

I have drafted an amendment that would mean that there is an update to the longstanding OPD where the ACCC reports into private health. It would simply look at how much of these savings are being realised from this agreement, and how much of them are being passed on to consumers, which is something that I think this parliament has a duty to do. When these sorts of savings are put on the table for consumers, we can put processes in place that actually check on them and make sure that they are flowing. We can't have a system where large deals are agreed to by government and then have no scrutiny. There really is no point in having this generous offer of almost a billion dollars over four years and it not flowing to consumers. People who are paying their premiums every month for themselves, their partner or for their whole family deserve to see a share of that almost $1 billion in savings. I have circulated an amendment. I believe it is a very minor one; it is simply adding a little bit more scrutiny. I would hope that the Senate will support it. I do not see a good reason not to support transparency measures, given this generous deal that we've seen that is going to deliver these savings.

I'd also like, just finally, to raise some concerns around the lack of visibility of the delegated legislation. Senator Scarr has also raised this. As a new parliamentarian, I've been pretty shocked, frankly, at how much is done by delegated legislation from ministers. I understand that's how it's done, but there should be scrutiny of that. Ideally we'd have the ability to debate it and potentially amend it here in the Senate, but, if there are bills that simply allow delegated legislation, I really believe that there should be visibility over that delegated legislation so we can have a look at it and have the debate in this context, rather than having to try and use what is the very blunt instrument of disallowance. For me, the first option is certainly preferable. Being on the Standing Committee for the Scrutiny of Delegated Legislation, I really would echo Senator Scarr's concerns around non-disallowable instruments. Parliamentarians are elected by their electorate, or by their state or territory, to scrutinise legislation, and to have a system where there are a whole range of things that are non-disallowable doesn't make sense to me. To me, it doesn't pass the pub test when it comes to politicians being elected to represent the people that vote for them.

I support this legislation. I foreshadow that I will be moving a second reading amendment, which I commend to the Senate. I really believe that it would add a layer of scrutiny without slowing up or affecting what is proposed at all.