Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Aged Care, Disabilities and Carers) Share this | Link to this | Hansard source

In making a contribution on the second reading, I seek leave to incorporate my speech.

Leave granted.

The speech read as follows—

The bill before the chamber is health legislation Amendment (Private Health Insurance) Bill 2006. This bill makes changes to the Private Health Insurance Ombudsman (PHIO) powers and also makes minor amendments with regard to the administration of the private health insurance rebate by Medicare Australia and the ATO.

This bill will make changes to the PHIO to expand and enhance his powers so that in addition to dealing with consumer disputes with funds, he can now examine issues related to the arrangements between the insurer, the provider of the service, ie the hospital and brokers.

The amendments will allow the PHIO to become involved in the mediation of disputes, although on a voluntary basis only.

This bill will also make the necessary amendments so that:

• The PHIO will be able to direct participation by the subject of a complaint in compulsory mediation
• S/he will be able to mediate between a health fund and a health care provider on his of her own initiative or at the Minister’s request, including directing participation in compulsory mediation;
• The PHIO will have the necessary powers to require the production of records not only from health funds, but also from health care providers and brokers; and
• The PHIO, PHIO staff, external mediators, and persons dealing with the PHIO are appropriately protected from civil and personal liability arising from the increased powers.

The bill also makes an important amendment to the legislation as it inserts an objects clause. This objects clause is important because it ensures that the PHIO will focus on consumer protection, even though the PHIO’s powers are extended to examine issues related to providers.

The last think Labor wants to see in an Ombudsman focusing only on dispute resolution – eg. Contractual disputes – between funds and providers – when its purpose surely should be to focus on how these issues impact on consumers. It is not the ombudsman’s role to act as the referee on pricing and service disputes between funds and providers. That is a job for the parties, themselves and of course, the Department of Health.

The government has stated that the purpose of the additional powers is to increase the effectiveness of the PHIO in resolving complaints and contract disputes.

Labor will support any measures taken to ensure that consumers are protected and have an advocate in the complex and difficult to navigate private health insurance sector.

Labor does, however, have some concerns about the consultation that took place in the lead up to this bill. The industry directly provided their input on this extension of powers. That is appropriate – in fact if, it didn’t occur there would be a real issue and we recognise that they support these changes.

We are aware however, that direct consultations did not include consumers and consumer groups, and the Minister’s request for submissions, through the Private health Insurance Circulars – came only 3 weeks before the deadline for submissions – which coincided with the Christmas week.

One of the biggest issues facing consumers is the affordability of their private health insurance and I would have thought consultation of consumers was integral to finding an agreed position on the PHIO. We know that premiums have been increasing at a rate over twice and three times that of CPI, and this has had the effect of negating the private health insurance rebate. It is important that even with the rebate, we do all that we can to keep private health insurance affordable and accessible.

This is particularly the case for those who rely on it for access to dental care, because without PHI people who need regular care have been abandoned since the Howard government’s abolition of the commonwealth Dental Scheme. Indeed, Mr Abbott believes if you can’t afford PHI you should rely on charity to get your teeth fixed.

Returning to the issue of consumer input to these changes to the PHIO; these changes will have no effect on the PHIO’s ability to deal with complaints relating to private health insurance premiums, and the changes will not allow the PHIO to make recommendations on these complaints as it can with other issues.

While the Department has argued that complaints about premium increases have been decreasing, this can be attributed to the PHIO’s lack of power to take any action in this area. While the regulation of annual premium increases is the responsibility of the Private Health Insurance Administration Council, there is no scope for the PHIO to examine, from a consumer’s perspective, the reasonableness of premium increases or the variability from state to state and fund within these states.

Recent evidence has shown that this variability costs fund holders as much as $290 more in some states – with Victorians facing the highest annual premiums for a comparable Medibank Private Hospital policy for a family. This means that Victorians pay up to 25 per cent more than Queenslanders for the equivalent hospital policy – and that Queenslanders pay up to 20 per cent more than their NSW counterparts.

Labor is concerned that the sale of Medibank Private will further add to the variability in the cost of health cover for Australians living in different states. Australia wide, Medibank enjoys a market share of 28.8 per cent and in some states, this concentration is much greater;

• In Queensland – 36.2 per cent
• In Victoria – 38.4 per cent
• In Tasmania – 35.7 per cent
• In NT – 44.3 per cent

This is why Labor is proposing an amendment which builds on some changes being made by this bill which relate to the PHIO’s ability to make recommendations to the Minister and the department. These amendments, which form part of this bill, extend the PHIO’s ability to make recommendations to the Minister or Department regarding disputes and conduct of brokers and providers, in addition to funds, as is already the case.

Labor is supportive of this extension, but would like to see this mechanism extended so that the ombudsman can use these provisions to further investigate premium increases.

This would involve the Ombudsman using his extended powers under this Act, in connection with the Trade Practices Act, so that the PHIO could make recommendations to the minister which would enable him to direct the ACCC to monitor the private health insurance industry’s pricing.

The amendment Labor is proposing not only makes changes to this bill, but also requires some changes to the Trade Practices Act (TPA).

The TPA allows for Price monitoring, whereby the Minister directs the ACCC to monitor the prices, costs and profits of companies and government authorities in relation to specified goods and services and to report the results of the monitoring to the Minister. While this monitoring role has been used infrequently, it has been used in cases where a particular market or sector has undergone some sort of structural change or reform, for example, in the case of the dairy sector.

The TPA also allows for the Minister to direct the ACCC to hold an inquiry into specified matters and report its findings to the Minister who then makes decisions on the recommendations. According to the Productivity Commission report, public inquiries initiated under the PSA have been used for a number of purposes, including;

• To determine whether pricing outcomes reflect competitive market forces and
• To advise the Minister on what types of prices oversight, if any, should be applied to the company or companies under inquiry.

It is important to note that recent changes to the TPA state that prices surveillance is to be applied only in those markets where the Minister believes competitive pressures are not sufficient to achieve efficient prices and protect consumers.

Labor thinks this will be particularly important following the sale of Medibank, when the sector is sure to see some consolidation and increase in concentration.

Its important because not only will competition fall, and concentration of market power occur in some states, but we don’t know what the effect on premiums will be, and neither does the Department of Health.

In the recent Budget Estimates hearings, the Department of Health was asked about the effect that the sale would have on premiums. Departmental officials confirmed that they had undertaken no work, no modelling to examine the impact of the sale on the market and on premiums. To our surprise, they also confirmed that they had no intention of finding out what the effect may be.

This is the case even though the Minister for finance and Minister for Health have asserted that this will put downwards pressure on premiums. I am not sure how these Ministers can assert this without any evidence or modelling; if the Ministers want to continue to assert this they must make it clear where this evidence exists or instruct the Department of Health to do the work necessary to find out what the effect will be.

Labor supports the intent of the bill but we need to make the point that it could have done much more to protect health consumers. That’s why Labor will move the tabled amendments to further protect members of Private Health Insurance funds.

I move:

At the end of the motion, add “but the Senate is of the view that the Minister for Health and Ageing stands condemned for failing to:

(a)

address the concerns of members of Medibank Private and proceeding with the sale of Medibank Private even though the majority of Australians are opposed to the sale; and

(b)

address critical structural weaknesses in the health sector such as workforce shortages and the rising costs of health”.

Kerry Nettle (NSW, Australian Greens) Share this | Link to this | Hansard source

The Australian Greens oppose the private health insurance rebate because it is a scandalous waste of public money. It is money that should be spent on public health. In the committee stage today, on behalf of the Australian Greens I will move to abolish the rebate.

Earlier this month there was an article titled ‘The injustice of middle-class welfare’ which went into the issue of the private health insurance rebate. It described it as ‘the most poorly designed social policy measure of the past decade’ and as being ‘utterly regressive’ in its manner. In the next financial year, the government intends to waste $3.169 billion of public money on the private health insurance rebate. That is a clear budgetary decision that indicates that the government would rather subsidise the private health insurance industry and the wealthier Australians who access that industry with $3 billion than spend that money on ensuring that all Australians can access a quality public health system based on their medical needs rather than on their capacity to pay.

The Greens believe that we should have a quality, top-class public health system and that abolishing the rebate and redirecting the money into public health is a step that we need to take in order to head us in that direction. The private health insurance rebate has been a massive failure by the government in their responsibility to ensure that all Australians are able to access that quality public health system. Even by the government’s own standards, the private health insurance rebate has been a massive failure. They claimed that it would relieve pressure on the public hospital system, and we have not seen that occur. If, however, the private health insurance rebate was really designed as a mechanism to subsidise the private health insurance industry then they have achieved their goal with extraordinary efficiency. They have also created an efficient mechanism for both bolstering health cost inflation and transferring health resources to the wealthiest Australians.

The private health insurance rebate has always been a subsidy for the private health insurance industry and the wealthier Australians who access that service. Australian Greens’ research, based on a survey of more than 55,000 Australians by Roy Morgan Research, showed that 19.6 per cent of households with people earning below $20,000 a year have private health insurance, yet for households earning over $100,000 a year the average private health insurance uptake is 63.85 per cent. A recent article in the Australian Financial Review outlined some research on this issue by an economist who used data from the ABS. This research showed that more than 80 per cent of people living in areas with the highest socioeconomic index would have purchased private health insurance even if there were no rebate, yet only 10 per cent of people living in the lowest-rating areas would have done the same. The article stated:

The rich-poor ratio is a staggering 8 to 1.

It went on to say:

Those who don’t buy private insurance don’t get the rebate, but they still have to pay taxes, from which the rebate is funded ... The uninsured who use the public hospital system also suffer in at least two ... ways. First, they face a reduced level of services at public hospitals due to underfunding. The amount spent on the rebate could have been used to provide much needed funds for public hospitals.

Australians without private health insurance still require and are entitled to public health care services in our public system, but our public system is put under even greater pressure due to the over $3 billion shift in resources and personnel towards the private system, which has the cash flow to deal with less urgent or optional health care needs. These are additional arguments to support the Greens’ position that we should transfer the money for the 30 per cent private health insurance rebate to our public health system.

Greens’ analysis of the Roy Morgan data on the uptake of private health insurance in Sydney and Melbourne revealed that there is a massive gulf between the nature of the services provided in affluent regions of the city and those provided in areas where people with lower incomes live. These differences are particularly acute when you compare Commonwealth electoral divisions held by the Labor Party to those held by the coalition. There are also considerable discrepancies in the location of private hospital beds.

The Greens’ research showed that 14 Sydney based federal electorates held by Labor have 1,311 private hospital beds compared to 2,594 beds in seats held by the coalition. This equates to 913 voters per private hospital bed in Labor held seats compared to only 470 voters per private hospital bed in coalition seats. The data also showed the discrepancy in private health insurance cover between Labor and coalition held seats. In the 14 seats held by Labor in Sydney, an average of 27 per cent of the electorate has private health insurance, whilst in 14 coalition seats an average of 48.75 per cent of the electorate has private health insurance cover.

In Melbourne there is a similar story. In the 16 seats held by Labor, 37 per cent of the electorate has private health insurance, while in the seven coalition seats 51 per cent of the electorate has private health insurance cover. We also see the same pattern in private hospital beds. The seven Melbourne based electorates held by the Liberals have 2,135 private hospital beds—that is, 290 voters per private hospital bed. In comparison with the Labor held electorate, there are 3,763 private hospital beds—that is, 381 voters per private hospital bed. This analysis shows that the private health insurance rebate effectively means that Labor voters in Labor held seats pay for a subsidy that mainly benefits wealthy Liberal voters living in wealthier suburbs.

Given all these facts, it is astounding that the Labor Party continues to support the 30 per cent private health insurance rebate. I have certainly attended meetings with the ACTU where they have been calling for the abolition of the private health insurance rebate, because they are well aware of this discrepancy and are well aware that it is an inequitable subsidy from the government to the private health insurance industry and to wealthier Australians.

It is also noted in the Greens’ analysis that for both Sydney and Melbourne the number of private hospital beds decreases the further the electorate is away from the city centre—a pattern that continues outside of metropolitan areas. Rural Australians do not benefit from the private health insurance rebate. The rebate not only fails people on lower income areas but also particularly fails rural Australians. In rural parts of Australia, private health insurance cover is very low.

On the weekend we heard Nationals leader Mark Vaile at the New South Wales Nationals state conference calling for additional health funding to be directed to rural and regional hospitals. Such additional funding is desperately needed and is something that the Greens and other organisations, like the Rural Doctors Association, have been calling for some time. But, if you look around for those much-needed public health funds, the elephant in the room is the over $3 billion of public health funding that is spent each year on the private health insurance rebate. If the National Party are serious about alleviating the shortage of public health care services in rural and regional Australia—as they talked about on the weekend—they need look no further than the private health insurance rebate and the $3 billion of public funds that sit there and are spent subsidising the insurance industry each year.

The Australian Greens’ research, based on a survey of more than 55,000 Australians by Roy Morgan, showed that the private health insurance rebate was skewed towards subsidising wealthy city based health insurance customers at the expense of their less affluent country counterparts. The research shows that an average of 35 per cent of households in country areas have private health insurance; yet wealthy city seats, like the one held by the health minister in the northern Sydney electorate of Warringah, have a private health insurance uptake of 80.6 per cent.

Low rates of private health insurance in regional areas are hardly surprising when we see that many of these areas have no hospitals and no specialists. The delivery of health services was highlighted in a recent Four Corners program which showed the difficulties that people in rural Australia have in accessing much-needed health services. That program reinforced for the Greens the conclusion that the lack of services leads to a perception that there is little need for people in these communities to take out private health insurance—yet the National Party continue to support a system that does not benefit the people for whom they claim to speak out. The evidence also shows that the private health insurance rebate is a powerful catalyst that drives health cost inflation. Since 2001 we have seen health insurance premiums rise by nearly 40 per cent. Those people who have enough to pay the health insurance premiums inequitably receive the largest cut of the rebate pie to support and subsidise their private health insurance.

As the Greens have repeatedly said, it is the public health sector that is best able to provide the most efficient and equitable health services, based on people’s medical needs rather than their financial ability to pay for services. Unfortunately, the current private health insurance rebate policy heads us in the direction of the United States style of a two-tiered health system: one standard and set of rules for the wealthy and a safety net based welfare system for those who cannot afford the exorbitant private health costs.

The government continues to use our public funds to give ever-increasing subsidies to the private health insurance industry. The Greens want to see an end to this inequitable transfer of public funds into the private health insurance industry. The amendments that I shall move in the committee stage of the debate will abolish the rebate by repealing the act that established it and also repealing a related taxation act. They will do so in nine months time, which would give sufficient time for private health fund members to notify their fund if they wish to change or cancel their insurance as a result of the withdrawal of the rebate.

The private health insurance rebate is a shameful waste of public funds—funds used to subsidise the private health insurance industry. Those funds can and should be spent on ensuring that there is a quality public health system for all of us. I can think of no other industry that gets this level of government support. For what other industry does the federal government use our taxation system to penalise people who do not buy the services of that particular industry in the way in which it does for the private health insurance industry? Our taxation system is used to penalise people who refuse to take up the services of the private health insurance industry. Knowing all of the subsidies that this government provides to a range of different industries, I cannot think of another industry that is given that level of support by the federal government. And the people who lose out are poorer Australians and Australians living in rural areas.

People who wish to support an equitable public health system have the opportunity to do so by supporting the Greens amendment to abolish the private health insurance rebate that I will move in the committee stage, so that that money can be spent investing in a quality public health system that all Australians can use regardless of their capacity to pay.

Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

I seek leave to incorporate my speech on the Health Legislation Amendment (Private Health Insurance) Bill 2006.

Leave granted.

The speech read as follows—

I rise to speak today on the Health Legislation Amendment (Private Health Insurance) Bill 2006.

This bill makes changes to the powers of the Private Health Insurance Ombudsman and also makes minor amendments with regard to the administration of the private health insurance rebate by Medicare Australia and by the Australian Taxation Office.

It increases the ombudsman’s power to be able to conduct investigations at their own initiative or at a minister’s request.

In addition to being able to deal with disputes between customers and funds, the ombudsman will be able to deal with issues related to arrangements between insurers, the brokers and providers of services—although obviously not clinical matters.

These amendments will also allow the Private Health Insurance Ombudsman to become involved in the mediation of disputes by giving the Ombudsman the ability to compel parties in a dispute to undertake mediation. At the moment the Ombudsman can receive and investigate complaints but can not act to help resolve them. So consumers may still find that they do not get much satisfaction in relation to their complaints.

This measure has the potential to help consumers by providing a much stronger avenue for redress when they feel they have been unfairly dealt with. Although the Ombudsman will be able to facilitate the resolution of disputes through requiring mediation, this bill does not actually give the Ombudsman any power to impose a resolution.

Health insurance is complex and there are many problems. People dealing with health insurance and health care providers are often bewildered by the different products available, the rules that apply to them and the lack of easily understandable and comparable information.

There are of course problems with exclusions and waiting times, difficulties switching funds, and benefit limitations for some treatments.

Australians have been pouring money into private health insurance funds for the most part not because the funds themselves are offering better value for money but because the government has coerced and frightened them into it.

Many people across the country are sacrificing other things in life to pay for their private health insurance because they are anxious and concerned that they might not be able to get the health care they need.

The Government has consistently argued that the policies they were introducing would lead to downward pressure on premiums.

But that is not what we have seen.

People with private health insurance are now paying, on average, premiums up to 40% higher than they were in 2001.

There have been eight successive increases in health insurance premiums, every one of them having been ticked off by the minister.

And this bill may in fact contribute to a further rise in premiums. The Government has suggested that the need for additional resources for the Ombudsman that will result from the extension of its powers as a result of this bill will be funded through a levy on health funds.

It is quite possible that these increased costs to health funds would simply be passed onto consumers in the form of increased premiums.

And it is not just ever increasing premiums. Consumers are also facing ever increasing gap fees. Each year, thousands of Australians are forced to fill the gap between the charges of the health care providers and the charges that the health insurance funds cover.

Gap payments to doctors increased by 19.2 per cent in 2003-04, according to the private Health Insurance Administration Council.

In July 2005 Minister Abbott launched a report that confirmed that 44 per cent of hospital visits attract a gap of $720 on average.

Gap fees are increasing and consumers frequently do not know they are going to experience these out of pocket expenses or the extent of them.

High gap payments seriously undermine any value in having private health insurance coverage and yet rather than try and get doctors to stick to the Medicare Schedule the Government is simply saying that doctors should let patients know how much money they will have to find on top of their health insurance premiums.

This bill does not have many controversial elements and there is some potential that it will increase the ability of the private health insurance ombudsman to protect the interests of consumers - as such the Australian Democrats will be supporting it.

The Democrats are supportive of any moves that will potentially provide greater consumer protection and given this bill’s provision which places consumer protection front and centre when it comes to the focus of the powers and actions of the Private Health Insurance Ombudsman, we are supportive of the bill.

We do note the concerns that have been raised about the lack of consumer consultation about these changes.

It is certainly unfortunate to say the least that there was no consultation with consumers and consumer groups on the proposed changes to a body that is set up to help consumers with health insurance problems.

Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

Thanks to those senators who have spoken to this bill this evening—or one senator. I am not sure that I quite got the gist of her remarks, which are based obviously on the politics of class envy, but nevertheless I suppose we live in a democracy and in a country where opinions, even those as extreme as those expressed by the Greens in this place, are at least listened to and tolerated in the interests of democracy. Certainly the politics of class envy are well and truly alive in this chamber tonight.

I want to speak briefly on this bill. It needs to be restated that the bill does enhance consumer rights, and that is what this bill is all about. It enables the Ombudsman to inquire into the whole privately insured experience, not just the actions of health funds. The Ombudsman will have the power to mediate and resolve consumer complaints about the services of practitioners, hospitals and brokers, and that clearly is the main focus. We are certainly not winding back the role of the Ombudsman; we are expanding it. Consumers will benefit, and the discipline that scrutiny imposes on those who benefit financially from private health insurance will improve the quality of services received.

In the second reading amendment the opposition talked about concerns for members of Medibank Private in relation to the impending sale. I ask the question: are they against breathing new life into a health fund whose ability to operate is shackled by the stifling restrictions of government ownership? Are they saying that a government owned Medibank Private will always be able to make decisions that put customers first and not be a policy plaything of the government of the day? Are they saying that they have discovered a sudden concern for the three million or so members of Medibank Private when Labor would happily dud those members by abolishing the private health insurance rebate and destroy private health, not just the private health insurance as we know it? I suggest that they try telling that to the thousands of Medibank Private members who earn less than $20,000 a year but who do provide for their private health cover in order to have the choice that would be denied by senators opposite. I repeat: thousands of Medibank Private members who earn less than $20,000 a year choose to take out private health insurance in order to enhance their choice. In the interests of brevity and in the interests of time I am more than happy to restrict my comments to those that I have just made. I again stress that this is a bill about enhancing consumer rights and I am very pleased to suggest that it be supported by everybody in this place.

Question negatived.

Original question agreed to.

Bill read a second time.

Debate interrupted.