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

The Private Health Insurance Bill 2006 and cognate bills represent a significant change to private health insurance policy. As the government says, this legislation is the most significant package of changes since the private health insurance rebate and Lifetime Health Cover scheme were introduced in 2000-01.

The most important policy change included in the package is the extension of private health insurance to provide cover for medical services provided outside of hospital. Under ‘Broader Health Cover’, as it is known, private health insurance funds will be able to cover medical services provided outside of hospitals for the first time. New services included under Broader Health Cover will include services which either substitute for in-hospital services, such as chemotherapy and dialysis provided in the home or community settings, or services which are designed to prevent hospitalisation in the first place. Broader Health Cover will also provide insurance for services designed to prevent people needing to go to hospital, including chronic disease management programs and health promotion programs.

This package represents a significant change in the way we think about health care—in particular, in trying to find ways to keep people out of hospital and to manage chronic illness better. For this reason, as my colleague Nicola Roxon, Labor’s shadow minister for health, outlined in the other place, Labor supports this package. But we do have some concerns, most importantly that the government seems only to see fit to go down this path for private insurance rather than for the whole health system.

Clearly, the private health insurance industry can see that it is better for their policyholders to stay out of hospital if they can. Keeping people out of hospital also makes good economic sense. This is precisely the rationale for Labor’s call to embark on some wider reforms of the health system, particularly in the area of Commonwealth-state relations. Unfortunately, the government has not turned its attention to this issue at all.

As I said, Labor is supporting this package of legislation because we believe it may provide significant benefits for the 44 per cent of the Australian population who currently have private health insurance. Labor supported the private health insurance rebate at the last two elections and will support it again at the next election. Labor accepts and understands that many Australian families have come to rely on this support and we will not be taking it away. So we are pleased that this package could mean that people with private health insurance cover might get better value for their money. And longer term, if it means that we manage chronic illness better and keep people from multiple re-admissions to hospital, obviously that will be desirable for the health of the nation as a whole.

Labor does, however, have a number of concerns about the package. Our main concern here is not primarily with the content of the package—as I said, we support the goal of keeping people out of hospital where possible, and the goal of preventing and better managing chronic disease. Our primary concern is about what happens to those not insured and therefore not covered at all by these changes.

The expansion of private insurance to out-of-hospital services raises equity issues around access to services equivalent to those under broader health cover reforms for people who do not have private health insurance. People without private health insurance, even after these reforms, will continue to be able to access services such as chemotherapy and dialysis through the public system in hospitals. But the privately insured will have options that may well become not just choices regarding a more comfortable venue for their treatment but also choices which will have significant health impacts, especially if, for example, they have better access to preventive and chronic disease management programs than those who rely on the public system. If this turns out to be the case, then it can be argued that the privately insured will have access to a better overall quality of health care. The logical extension of this argument is that people who cannot afford private health insurance may be more likely to end up in hospital because, unlike people with private health insurance, they might not be able to access programs which could prevent them from having to go to hospital. This issue was examined in detail by the Senate committee inquiry into these bills.

It is this element of the package with which Labor is most concerned. We believe it presents a departure from the current balance between privately and publicly funded services and the rationale that private health insurance gives private health insurance consumers additional choice. Unless there are changes in other parts of the health system to create the necessary incentives for public providers to provide similar services, universality as the core of our health system will be threatened.

The government disputes any suggestion that this package represents a shift towards a two-tiered system of health care. But if the broader health cover provisions give people with private health insurance access to services and treatment options which people without insurance may not have access to—and potentially may be disadvantaged by not having access to—then the package will be doing exactly that. As I mentioned earlier, Labor will support this package because we want those with private health insurance to get any improved benefits that they can. We expect that it will have significant benefits for private health consumers and in particular we believe that it will lead to important innovations in care and services provided outside the hospital gate.

Having introduced these changes for people with private health insurance, we urge the government to work toward addressing access to these kinds of services for the uninsured. With the negotiations over the next set of Australian health care agreements due to start this year, the government has a perfect opportunity to show its concern for keeping people out of hospital and for those who rely on the public health system.

There are several other parts of the government’s private health insurance policies that Labor have concerns with. For example, the government insists that the package will not have any impact on premiums. In fact, in his second reading speech the health minister went as far as to argue that some of the changes will actually reduce pressure on premiums. We remember the last time that the government said one of its policies would reduce pressure on private health insurance premiums, and that was in 2000 and 2001 when the private health insurance rebate and the Lifetime Health Cover scheme were introduced. Since then, as anyone with private health insurance knows, there has been a 40 per cent increase in private health insurance premiums. Given the government’s track record, why should we believe anything that Mr Abbott says about private health insurance premiums? Is it not counterintuitive to think that expanding the services offered will reduce premiums? If we manage people’s care particularly well in the long term, we may—and I underline ‘may’—make some decent savings, and the insurers no doubt have this in mind in wanting to go down that path. But, in the short term, we are concerned that the changes may in fact have the reverse effect and lead to further increases in private health insurance premiums in this country.

We should not be accepting the minister’s word on this issue. Despite Minister Abbott’s rhetoric about wanting to protect consumers by retaining his role in reviewing premium increases, this bill actually weakens the existing legislative framework in this regard. Under the National Health Act currently, one of the objectives of the Private Health Insurance Administration Council, PHIAC, is to minimise premium levels. However, in the Private Health Insurance Bill that we are debating today, this objective has been removed from PHIAC’s remit. One has to question how serious the government is about keeping premiums down if it is not prepared to include these kinds of consumer protections in the bill. Labor moved an amendment to the bill in the other place to address this issue and will do the same during the committee stage in the Senate. Mr Abbott said in the other place that he would be prepared to consider Labor’s amendment. We urge the government to support it, or the Australian public is entitled to conclude that the government is not serious about its promises on private health insurance premiums.

I would like to turn to a number of specific issues relating to the package. Labor are concerned that the bill does not pay enough attention to the standards and quality of services to be provided under the rubric of Broader Health Cover. We need to ensure that consumers have the protection of robust quality and safety standards wherever those services are being delivered. The legislation to provide for quality assurance mechanisms for Broader Health Cover products does not take effect until July 2008—in other words, there will be a 15-month gap between implementation of Broader Health Cover in April 2007 and implementation of the standards and quality provisions in July next year. Labor believes this represents an unacceptable risk to consumers of private health insurance.

Labor moved an amendment to address this issue during the debate in the other place which, unfortunately, the government refused to support. The issue was also discussed by the Senate committee’s report into the legislation. The Senate committee heard from several important stakeholders such as the Australian Private Hospitals Association and Catholic Health Australia, who share Labor’s concern about quality and safety standards. The Senate committee recommended:

That to demonstrate a commitment to quality improvement and to guarantee patient safety, existing quality assurance, professional standards and accreditation regimes should continue to apply to broader health cover services provided until alternative accreditation or equivalent arrangements have been put in place under this legislation.

We urge the government to accept the committee’s recommendation, and Labor will move an amendment to this effect in the Senate.

Labor also shares the concerns of interest groups such as the Australian Medical Association about the lack of sufficient safeguards in the bill for doctors to expressly continue to make clinical decisions in the best interests of their patients. Some groups have raised concerns about this package as being a move towards managed care—that is, a system whereby the private health insurer assumes responsibility for the health costs of its members, through, by example, direct contracting arrangements with doctors and other providers. This means that the private health insurance provider would be involved in the clinical decision making concerning the patient.

The clinical freedom of doctors as against health funds or any other groups, including governments, to determine the best course of treatment for their patients is a fundamental of the Australian health system which Labor believes should be protected at all costs. This issue was again considered at length in the Senate committee report. Many important groups in the health sector, including the AMA, the Australian Private Hospitals Association and the Australian Physiotherapy Association, share Labor’s concerns about protecting the clinical autonomy of health professionals.

The Senate committee recommended that the operations regarding clinical independence currently included in the bill be reviewed after four years:

... to ensure that the implementation of broader health cover has not resulted in any reduced clinical oversight of patient care nor had any negative impact on the quality of and delivery of health services to patients.

Labor support this recommendation, but we also believe that more robust protections of doctors’ clinical autonomy ought to be included in the legislation now. Labor moved an amendment in the other place to address this issue and will be doing the same during the committee stage in the Senate. Again we urge the government to support our sensible amendment.

In addition to the introduction of Broader Health Cover, the bill contains some policy changes of note. The first is the introduction of a requirement for private health insurance funds to produce standard product information on their private health insurance products. People recognise how difficult it is to compare offerings from competing private health insurers—I have to say it is a bit like comparing mobile phone packages. This requirement in the bill is designed to make it easier for consumers to compare different products and to understand what entitlements they may have when they take out a policy. Labor strongly support the introduction of these requirements as, if they work, they will be of significant benefit to consumers—though we do note the concerns of some stakeholders about the implementation of this measure, as was discussed in the Senate report.

A related issue, also canvassed by the Senate report, is the issue of informed financial consent—that is, the ability of patients to access information about the costs of their treatment before that treatment takes place, except in emergency cases, for obvious reasons. According to the Australian Health Insurance Association, almost 20 per cent of privately insured hospital episodes create unexpected bills. Obviously this is bad for patients, but it is also bad for the private health sector and its relationship with its consumers.

Unfortunately, the government has chosen not to address this issue in this package of legislation. There is currently an information campaign underway to encourage doctors to obtain informed financial consent from their patients, which we understand is having some moderate success. However, we believe this is an important consumer protection issue which the government is dealing with extremely tentatively.

The bill will also introduce a change to the Lifetime Health Cover scheme, whereby people who have retained private health insurance for over 10 years will no longer be subject to Lifetime Health Cover loadings on their private health insurance premium, even if they took out their insurance after they turned 31. Labor supports this change.

This package of bills will also streamline the private health insurance legislative framework by bringing the main components of the existing framework and the framework for the new policy proposed by the package under one act. We of course support these changes, though we do share the concerns of some stakeholders, including the Medical Benefits Fund, who submitted to the Senate their concern about:

... the number of provisions under the Bill which can be modified substantially in whole or in part through the making of rules by the Minister or PHIAC (as the case may be).

They were essentially saying that much of the power was now being held by the minister or the Private Health Insurance Administration Council. The Senate committee:

... considers that the over reliance on extensive subordinate legislation to implement important reform packages does not allow for sufficient scrutiny of the objectives of the legislation.

The package will also introduce a change to existing risk equalisation, or reinsurance, arrangements. Labor supports this change, as it will result in a better distribution of the overall insurance risk than the current formula, and so is an improvement on the current arrangements. But we remain somewhat surprised that the government has chosen to adopt this model when it was clearly not the government’s preferred option. The explanatory memorandum makes clear that the government preferred a different model—a capitation model—as this would have been the ‘best strategic option for the longer term’. If there is, in the government’s view, a better long-term option, why did it not pursue it? We also note from the Senate committee report that there are some outstanding issues with the risk equalisation arrangements that are yet to be resolved.

To conclude, as we have made clear both here and in the other place, Labor support the package. We think it is important to focus on prevention measures, on better managing chronic disease and on keeping people out of hospital wherever possible. But Labor are concerned about the equity impact of this package. We are concerned that people without private health insurance will miss out. This is not a reason not to support the package, as we endorse the package’s rationale, but it is a reason for the government to turn its attention to thinking about how people who rely on the public system do not miss out altogether. We want to make sure that those who are not insured get the best quality services as well. Private health insurance should provide people with choice and different options but not a whole range of health services that are not available to others.

I would like to thank the Senate committee—Senator Humphries is here—for the work that they did on these bills in a very short period of time. Once again we were tasked with dealing with an extensive piece of legislation and no regulations—admittedly, they appeared on the morning of the Senate inquiry—and we came up with what I think is a reasonable report, given the time frame that we had to work within.

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

This package of seven bills makes changes to the current regulatory regime for private health insurance. Of these, the Private Health Insurance Bill 2006 is by far the most significant. It represents the most significant change to private health insurance since the government introduced its 30 per cent rebate and Lifetime Health Cover back in 2000-01. It has implications not only for the privately insured population but also for the 56 per cent of the population who are dependent on the public system—indeed, on our health system as a whole.

The government’s oft repeated claim of being ‘the best friend that Medicare has ever had’ becomes more implausible with this latest insidious step in the white-anting of the health system. This bill does not address the real problems in our health system: inefficiencies and duplication; waste cost, particularly in the private sector; a failure to make the best use of our workforce; neglect of quality and safety issues; and of course the ever-present cost shifting and buck-passing between the Commonwealth and state and territory governments. Rather than tackling any of these, the government has spent billions of dollars on cosmetic solutions, leaving the foundations to crumble.

The measures in this bill have the potential to accelerate that deterioration. The bill allows private health insurance funds to provide what the government has called Broader Health Cover. This means that for the first time private health insurance will be able to cover medical services outside the hospital environment. Health funds will be able to cover services which are classed as part of an episode of hospital care or can substitute for an episode of hospital care—services such as home nursing, dialysis and chemotherapy. They will also be able to provide insurance for services designed to prevent people from needing to go to hospital—programs such as chronic disease management and health promotion.

The Democrats have always been advocates for more prevention and early intervention in our health system. Clearly, preventing people from needing hospitalisation is a very admirable goal. Under most circumstances we would strongly support moves in that direction. Similarly, the Democrats support broader access to non-hospital based care. Health care should be provided in the most appropriate and safest setting possible and funding mechanisms should be designed to support that.

But—and it is a big but—these new arrangements will increase the inequalities which already exist within the health system and threaten universalism, which is at the core of an efficient and equitable health system. An individual’s health care, and indeed their health status, should not be determined by virtue of their financial status or their ability to buy or maintain health insurance. A universal healthcare system means that services and benefits are available to everyone on the same terms.

Under the broader healthcare arrangements, services will be available to people with private health insurance that are not equally available to those without it. Under these arrangements, there will be a range of preventive and disease management services available to those with private health insurance. The Democrats say that Australians who do not have private health insurance should have the same access to and the same options for medical treatment, out-of-hospital care and preventive programs as those with private health insurance.

It is not easy to predict the effects of changes to health insurance. This is a very complicated area. But if the government’s goal was to encourage the decay of the public health insurance system then expanding the role of private health insurance while neglecting Medicare and publicly available services would certainly be a good start.

It is true that this legislation offers potential benefits to the quality of health care for the privately insured and may make private health insurance more attractive to some, but we must consider these potential benefits within the context of the broader health system. At the very least it is likely that this bill would exacerbate workforce shortages in public services through further syphoning of a wider range of healthcare professionals into the private sector. The government’s argument that this will reduce premiums is doubtful to say the least. Providing services to patients in the community is not necessarily less expensive, and administration costs for managing these new processes may well be substantial.

In its submission to the inquiry into this bill, MBF noted:

... any potential for health cost control through more innovative models of care are unlikely to be reflected in premiums over the short term.

MBF suggested:

... costs of covering preventive programs will be upfront, resulting in a potential upward pressure on prices in the short to medium term.

The government does not have a good record on keeping premiums down. They have all gone up by 40 per cent since the introduction of the 30 per cent rebate.

It is also notable that this legislation removes the objective of the Private Health Insurance Administration Council to ‘minimise the level of health insurance premiums’ and replaces it with ‘protect the interests of consumers’. It would seem to be the case that the government does not believe its own assertions about premiums not going up.

The Democrats will be moving an amendment during the committee stage to restore the objective of the Private Health Insurance Administration Council to minimise the level of health insurance premiums. We will also be moving our standard appointments on merit amendment, in this case for the appointment of the Private Health Insurance Ombudsman and the appointments of the Private Health Insurance Administration Council’s CEO and members. This is essentially an accountability and probity amendment, which is very timely since we are considering aged care. We have moved it before on many occasions and we will no doubt move it again in the future. We think it is an appropriate protective mechanism.

The Democrats are not opposed to private health care and indeed see some value in a private healthcare sector that complements the public health system, but we do not support the extent of public funding for the private sector that has developed under the Howard government. Nor do we support the escalating commitment of the government to subsidising the private health insurance industry. As part of his evidence to the committee, Mr Ian McAuley from the University of Canberra said:

What we have had in private health insurance when we count measures such as the rebate, the one per cent tax penalty and the Lifetime Health Cover et cetera are five rounds of increasing industry assistance now costing about $4 billion a year. That is $3 billion in direct outlays and at least $1 billion in forgone revenue because of the one per cent incentive.

The 30 per cent rebate to prop up private health insurance is highly inefficient and it undermines the health system as a whole. Private health insurance is clearly inflationary; it misallocates resources and it undermines equitable access to health care. A national public health insurer will always be the most efficient and equitable way to fund health care. We are not saying that all health care should be free or delivered by public organisations but that a single national insurer has the ability to contain costs and unnecessary usage. If the government wants to support private service providers and individual choice then there are much more efficient ways than providing what is little more than industry protection to private health insurance.

The legislation does nothing to address the inefficiency and sustainability of the private health sector. There are some aspects in which this package has merit. I have no doubt that the move to provide standard product information to make comparisons between different insurance plans easier will be welcomed by many people. Working out what is and what is not covered and how much it will cost with the many different health insurance products that are available is a daunting task indeed, and adding out-of-hospital options will increase the complexity. It is unfortunate, however, that the government has seen fit to only provide resources for a website to display this comparative information. This will mean that this information is not easily available to the very many people who still do not have access or good access to the internet—and we should be thinking in particular here about the aged population. Given that the government could find $50 million in the last budget to give to the private health insurance industry to advertise its products, it is surely sensible to find money to make useful information available to the public.

The legislation implements changes to streamline the administration of and regulatory arrangements for the sector, and that too seems to us to be a sensible thing to do. However, it is a problem that these bills will allow a health insurance business to operate other health related businesses—for instance, clinics, hospitals and health related financial products—without requiring the health insurer to advise consumers of its links to these other health related business activities. We think this has substantial potential for conflict of interest.

The legislation introduces a change to the Lifetime Health Cover scheme. Under the current scheme, private health insurance gets more expensive as you get older if you join after you turn 31. Currently, people pay a two per cent loading on top of their premium for every year they are over 30 when they first take out hospital cover. Not surprisingly, this is a major disincentive to join for older Australians. This legislation puts in place a system so that people who have retained their private health insurance for over 10 years will no longer have to pay the Lifetime Health Cover loadings. In our view, Lifetime Health Cover erodes the policy of community rating—something which is a central tenet of the private health insurance system in Australia.

The introduction of Lifetime Health Cover frightened many Australians into taking out private health insurance, and it still does. They are unwilling participants in the system. The Democrats would like to see Lifetime Health Cover removed. This would free up millions of dollars which currently go into the rebate—dollars which, we say, could be spent on areas of real need, such as dental care—and it would also release people from a system that is expensive to be part of.

During the committee stage we will be moving an amendment to remove Lifetime Health Cover for everyone, not just for people who have paid loaded premiums for 10 years. Indeed the Democrats are concerned that the broad health cover measures in this legislation will lead to a further erosion of the principle of community rating. Broader Health Cover will give health insurers greater flexibility in designing products targeted at specific populations and the ability to set different prices for different products. As was pointed out in submissions to the inquiry, this will increase the ability of insurers to engage in reducing the risk profile of the insured population. That is known as cream skimming—in other words, attracting low-risk, low-cost members through financial and other incentives not available to high-risk, high-cost members. Will we see higher risk members priced out of the private health insurance market? I think so.

The Democrats are also concerned that this legislation allows for a 15-month lag between the implementation of Broader Health Cover in April 2007 and the implementation of the standards and quality provisions in July next year. What assurances do holders of private health insurance cover have about standards and quality of service within that time? This represents a completely unacceptable risk to consumers of private health insurance. As I said, the exact outcomes of these bills are unknown but there are very substantial risks involved. This is why there must be a review of the impact of the legislation, if it passes.

We will be moving an amendment calling for an independent review of the act, a review which looks at the extent to which broader health cover has eroded universalism in health care and further contributed to inequality in access to services between those with and without private health insurance. The review would also look at whether the new health insurance products that are developed as a result of this legislation are contrary to the principle of community rating, and it would look at the adequacy of the standard information statements arrangements in assisting consumers to compare private health insurance products.

Given the increasing amount of public funding directed to private health insurance, we should be reforming it and making it a better product. But, of course, we should be doing much more than that. We should be reassessing its role in a mixed public-private system that should provide equitable and efficient health care. We should be reassessing the degree of support the government provides to what is essentially an inefficient intermediary service. So this is another wasted opportunity.

My second reading amendment will condemn the government for: escalating commitment to subsidising private health insurance while failing to explore more efficient methods of supporting the private health sector; providing mechanisms which will increase access to services for those with private health insurance while failing to equivalently increase access for those without private health insurance; and failing to invest in the public health system and undertake substantial reorientation of the public health system towards prevention and early intervention.

This amendment also calls on the government to limit the use of taxpayer subsidies of private health insurance by replacing the 30 per cent private health insurance rebate with a capped and means-tested rebate. The Democrats have always deplored the many billions of dollars spent on the private health insurance rebate, because it could have been much better spent.

I move:

At the end of the motion, add:

                 “but the Senate:

             (a)    condemns the Government for:

                   (i)    escalating its commitment to subsidising private health insurance while failing to explore more efficient methods of supporting the private health sector,

                  (ii)    providing mechanisms which will increase access to services to those with private health insurance, while failing to equivalently increase access for those without private health insurance, and 

                 (iii)    failing to invest in the public health system and to undertake substantial reorientation of the public health system towards prevention and early intervention; and

             (b)    calls on the Government to limit the use of taxpayer subsidies of private health insurance by replacing the 30 per cent private health insurance rebate with a capped and means-tested rebate”.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Private Health Insurance Bill 2006 and related bills. As speakers in this place and in the other place have already noted, this package of bills signifies big changes to private health insurance. As my colleague Senator McLucas also said earlier, Labor supports the package, but with some serious reservations and concerns.

My main concern is based on the fact that the government’s private health insurance policies have been a monumental failure in addressing the fundamental issues of access, cost efficiency, quality and equity that are increasingly besetting Australia’s health and hospital services. My worry—shared by my colleagues—is that these bills are, in some respects, sending us further down that track.

The background to these changes is this. Many people living in the outer metropolitan areas of Australia’s major cities cannot get access to a local GP when they need one. The health status of Australia’s Indigenous population remains nothing short of a disgrace. Australians are experiencing a serious increase in the prevalence of debilitating chronic and lifestyle diseases. Rural and remote health and hospital services continue to decline and decay, while rural communities struggle to recruit and retain medical practitioners. It has become indisputable that Howard government neglect over the past 10 years has resulted in Australia having a critical shortage of locally trained general medical practitioners and medical specialists that will take years and years to overcome—if it is ever overcome. All this while the federal coalition government continues to blame the states and territories for anything that goes wrong in the health system, even though it controls the major health funding and policy levers. Do not tell me and other Australians that pressure on the public hospital system has not increased since the introduction of the Howard government’s private health insurance changes and since the Howard government started diverting its health dollars away from Medicare to the private sector.

Over the 11 long years that the Howard government has been in office, there has been a serious and unrelenting assault on the original philosophy and principles of the Medicare scheme, and it is my concern that elements in these bills carry on that assault. I should not need to remind members of the government that, under existing laws passed by the federal Parliament of Australia, all Australians have the right, without qualification, to free hospital treatment for needed medical care.

Despite this legal right, this government now applies a tax penalty on Australian families who earn an average annual wage of approximately $50,000 if the family does not contribute to private health insurance. If that is not an attack on Medicare and average Australian families, I do not know what is. In effect, this government has passed laws requiring average Australian families to subsidise its private health insurance policies. When the government introduced this penalty it said it was specifically targeted at high-income earners. What a sick joke! So far as this government is concerned, a family on $50,000 is a high-income family.

The Howard government’s massive subsidisation of private health insurance was supposed to reduce cost and demand pressures on the public hospital system. It was supposed to provide a private sector example to public hospitals of how to improve the efficiency of hospital service delivery. It was supposed to improve access to public hospital services for people who wished to continue to exercise their right to free hospital treatment under the Medicare scheme. The government’s rhetoric, repeated by Senator Scullion, that federal government subsidisation of private health insurance premiums would take the pressure off the public hospital system has been shown to be a total and utter sham.

The Australian people have had a gutful of the deception of this government in respect of health and hospital services. The Howard government’s response to any problem with Australia’s health system is to blame the states and territories and to play the fear card. The implication constantly made by government members of parliament is that, if you do not have private health insurance, there is a high risk you will not be able to get into hospital when you need to or will not be able to choose your doctor. You can see what this government is about. They are into the fear game. Because their private health insurance policies are so shonky, they have now taken to putting the frighteners on vulnerable Australians. What they are saying to these people is: ‘Forget Medicare—we are going to trash that. Get into private health insurance if you want to ensure you can find a doctor or a hospital when you get seriously ill.’ Yet every time this government sinks the knife into the Medicare scheme and the equity principles underpinning Medicare, it comes out with its holier than thou rhetoric about how it loves Medicare. If this government had any real commitment to Medicare, had any decency towards the less well off in the community, why in God’s name would it be scaring vulnerable, low-income members of the community into taking out private health insurance in order to contribute to the profits and incomes of health funds, private hospital operators and private medical specialists?

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Senator Brandis interjecting—

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Wasn’t one of the main reasons that Medicare came into existence to ensure that all Australians—the well off, the less well off, the young and the old, Senator Brandis; Australians who live in cities and Australians who live in regional, rural and remote Australia—have access to high-quality health and hospital care regardless of their circumstances? Isn’t this why Australians are so committed to Medicare? It is because it is a fair system, not a fear system.

The government’s health policies are following the same pattern of unfairness that has been typical of much of its actions since it came into power 11 long years ago. If anything, its policies of fear and unfairness and its attacks on the lives of ordinary Australians have intensified, especially since the last election. It is about time that senators opposite realised we are seeing in this country a growing rejection of their tactics of fear.

If the Howard government were in any way sincere about its commitment to Medicare, it would ensure that low- and fixed-income people could continue to rely on having access to Australia’s public hospitals, particularly Australia’s world-class public teaching hospitals. Australia’s public teaching hospitals remain an enduring legacy of previous federal Labor governments. Now these same hospitals are becoming victims of Howard government neglect. The fact is the choice-of-doctor myth is a self-serving tactic of the private health funds and the private hospital sector to sell their services. In reality, choice of doctor is more a choice between a high-cost doctor and a low-cost doctor. It is not about choice between a good and a not so good doctor. The fact is that very few people have access to sufficient information on which to base an informed choice of doctor.

As my colleague Senator McLucas has already pointed out, Labor has serious concerns about some aspects of these bills that take away consumer protection by eating away at the existing legislation. The fact is that when a person becomes seriously ill and requires admission to hospital, they and their family are often in no state, nor do they necessarily have the time, to exercise choice of doctor. The fact is that, since the current government came into office, in many places in Australia there have been serious shortages of medical specialists. As a result, patients often have no other option but to accept the first available specialist. The fact is that these days the biggest challenge is to actually find a doctor who will see and treat you. If the government were really serious about giving patients informed choice of doctor, it would facilitate the availability of public information on individual doctor qualifications, experience and track record. I would like to see that.

Let us look at the facts about private health insurance since the Howard government introduced its private health insurance premium rebates. The government has been taken to the cleaners by the private health funds, the private hospital sector and private medical specialists. They have all creamed it. In fact, they have made a shirt load. What a cakewalk it has been for the private health insurance funds since the introduction of the premium rebate, when an avalanche of taxpayers’ money began to flow into the health funds’ money bags! Since 1999 the health funds have basically not had to do anything. They have simply jumped on the back of Australian taxpayers. The Australian government has done all their work.

Since the time before the introduction of the health insurance premium rebate for privately insured hospital patients, the private health insurance funds, in real dollar terms, have not put one extra dollar of their own money—not one dollar of their own—into the private health insurance system. At the same time, the funds have helped themselves to—wait for it—over $1.5 billion of taxpayers’ money to help fund their management expenses. For senators opposite I will repeat it: $1.5 billion. Surely one of the reasons the government decided to invest so much money into private health insurance, rather than Medicare, was to bring about a similar lift in private health fund contributions. Unfortunately, it did not happen. But do not worry: the well-off people in the community have been able to send a good part of their private hospital bills to the taxpayer to pick up.

Also, how can the private health insurance funds continue to justify their 10 per cent management expense ratio when they do nothing but collect taxpayers’ money and members’ contributions, send out cheques to private hospitals and medical practitioners and run expensive media campaigns? It is about time they stopped living the easy life and began to earn their keep. It is about time the Howard government stopped doing their bidding for them.

Since the introduction of the government’s private health insurance changes, the cost of private health insurance has increased by 46 per cent, way above the CPI increase. The result is that every year the cost of private health insurance is becoming less affordable for the average family. Families are on the same treadmill they were on prior to the rebate. Since the Howard government came into office 11 long years ago, federal outlays for private hospital services have increased from 10 per cent of Australians’ total expenditure on private hospital services to 34 per cent.

The Howard government has clearly taken the lazy view that all you have to do is throw money at the private sector and wondrous things will happen. What it has failed to recognise is that the private hospital sector has one main aim: to maximise its profitability.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Shame!

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I will take that interjection, Senator Brandis. There is nothing wrong with that, except that increased profits should not be simply derived from maximising access to taxpayer money without proper accountability. The private hospital operators have used increased private health insurance coverage to expand their businesses into hospital services which offer the highest profit mark-up and have the potential for high-volume growth. Private hospital operators certainly have not gone down the road to their nearby public hospitals and asked the public hospital CEOs what the private hospitals can do to relieve the pressure on those public hospitals. So a substantial mismatch has occurred between the private hospital sector’s profits and service growth strategies and sufficient growth in those categories of private hospital services needed to reduce demand on the public health system.

The Howard government’s private health insurance changes opened the door for private hospitals to ramp up activity in those hospital treatments and procedures that provide the greatest profit margins, particularly day-only treatments, and that is what the private hospitals have done. Increased private hospital activity has not taken the pressure off the public hospital system. On the contrary, with the help of the private medical specialists, the private hospitals have created another, more profitable market. We are now seeing that, for many hospital procedures and treatments, privately insured patients have much greater access than Medicare public patients to treatment. This is the threat of the two-tier system referred to by Senator McLucas.

Australian Institute of Health and Welfare published data show that, in the period 2000-01 to 2004-05, private hospital same-day separations increased by 31.5 per cent. That is twice the rate of increase experienced by public hospitals. It is no simple coincidence that private hospitals have ramped up their concentration on same-day services. Between 2000-01 and 2004-05 the average private health fund benefit for a day-only separation in a private hospital increased by 32 per cent while the average bed-day benefit for a multiday stay separation increased by only 25 per cent.

Obviously, the higher the number and proportion of same-day patients, the higher the rate of revenue growth and the higher the profit margin for private hospital operators. While the private hospital sector’s number of low-cost, same-day bed days rose strongly over recent years, the number of private hospital higher cost overnight bed days has remained virtually the same. At the same time, the public hospital system has had to absorb a 4.5 per cent increase in higher cost overnight bed days.

I want this to be very clear: I am not criticising private hospitals for seeking to maximise returns to their owners and shareholders. What I am condemning is the lazy way the Howard government has been willing to so blatantly, and I think wantonly, squander Australian taxpayers’ money and put at risk major parts of Australia’s health system. The public hospital system is in a worse position than it was before the introduction of the Howard government’s private health insurance changes. The fact is that the private hospital sector’s average patient cost weight has fallen. Less average patient treatment complexity equals lower costs and—guess what!—higher profits. So, as a result of the Howard government’s approach to health care, the private hospital sector has managed to shift costs onto the public hospital system. What a testimony to total incompetence by this government. No wonder our public hospitals are buckling under the pressure.

To further underline the total mismanagement by the Howard government of its private health insurance policies, in the five years to the end of 2004-05 the number of licensed private hospital beds increased by only 271—a measly 271 beds across the country. How is that piddling number of additional private hospital beds supposed to take the pressure off the public hospital system? How can the Howard government justify spending nearly $6 billion on private heath insurance rebates in respect of private hospital services over the five years to 2004-05 when all that was achieved was 271 additional private hospital beds? How miserable, how lousy, how stingy! In the same period, the number of public hospital beds increased by no less than 2,700 to meet demand.

Since the Howard government came into office, federal government payments to the private hospital sector have increased by no less than 330 per cent. Over the same period, federal government outlays for public hospital services have increased by only 55 per cent. These figures clearly show what this government is up to. It intends to starve the public hospital system to death while it pours money into the private hospital sector. In cost-effectiveness terms, the government’s private health insurance policies have been a monstrous failure. The public hospital system has for decades been at the very heart of the Medicare scheme. The public teaching hospitals have been the engines of progress in ensuring that Australia’s health and hospital care standards and equality of access to health care have remained the envy of the world. But this government appears hell-bent on breaking the heart of the Medicare scheme, and that is not what Australians voted for.

Finally, I would like to join Senator McLucas in thanking the Senate committee for its work and also join her in urging the government to support Labor’s amendments during the later consideration in detail of this package in the Senate.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I congratulate Senator Sterle on that contribution.

George Brandis (Queensland, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

It was nearly as silly as something you might say, Bob.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Senator Brandis says it was silly, but it was not. It had a lot of factual content—something he might learn from—and it put very clearly the argument that the public health system in Australia is getting a raw deal from this government when compared to the huge amount being poured into the private health system. The figures he gave, which came out of Senate committee work and so on, are a telling testimony to that fact.

Basic to those figures are that 43 per cent of Australians have private health insurance and therefore access not only to the benefits already available but also to those which are inherent in the pieces of legislation now before the Senate: the Private Health Insurance Bill 2006 and related bills. But that means that 57 per cent, or 12 million Australians, have had that door shut to them. It is a two-tier system with the gap between the two tiers growing greater all the time—a country divided on the basis of the fundamental right of all citizens to a high-quality, effective healthcare system and the health professionals divided on their right to have the support of government in delivering the healthcare system to the public. The increased pressure on the public healthcare system and its professionals is testimony to the neglect of this government—that is, the pressure on doctors, nurses and other health professionals right across the country, where the public system has had such a raw deal.

One thing that is not canvassed in the legislation but which is a telling testimony to that neglect is the dental health system. Just today I read in the Sydney Morning Herald that the private health insurance system gives, I think, $483 million to high-income earners who are accessing the dental health system. Compare that with the 600,000 Australians who are on waiting lists and with the lack of choice which comes to those 600,000 Australians when they actually get to the end of that waiting list in the quality and type of dental health care that is available to them. There is nothing more disgraceful in this area than the Howard government’s very early impulse to carry through the dismantling of the concession card dental health system for Australians on low incomes, including pensioners and poorer people generally. That has meant a general deterioration in the dental health care of Australians who are on lower incomes. It is a matter I will be taking up more in the future in this place.

The government says that the package of bills before us will create new opportunities for the private health sector, allowing greater innovation and even greater choice in private health care. When implemented, the legislation will be a win for consumers, a win for private health insurers and a win for service providers. But it will effectively be a loss for the 12 million Australians who do not have access to that system, and that is the problem with this legislation and many of the components of the bills that come through. They are good in themselves, but they are only good if you are wealthy. They are good in themselves, but they are particularly good for those in the skewed system in which supporters of the government get benefits but the rest of the population, by and large, are left without the benefits. The minister said:

Currently insurers are subject under the National Health Act to no fewer than 48 conditions of registration, and could be deregistered for breaching any of them.

One could say, ‘Fair enough’—but not the government. The minister went on to say, ‘This is as clumsy as it is onerous,’ and that this system will be replaced by a transparent set of product standards. The minister said that at the heart of these standards will be the notion of complying health insurance products and that insurers will have clear obligations relating to community rating premiums, benefits, waiting periods, portability and the provision of standard information. The minister went on to say:

By regulating products not providers—

we are opening—

the door more widely to—

potential—

new entrants into the private health insurance industry and the possibility of existing health insurers adapting their businesses to current market conditions and consumer demands.

It is a standard of regulating products, not providers, that the government has moved to, saying, ‘Let’s not regulate the providers; let’s look at the products.’ In doing so, the minister said that the bill also includes offence provisions for breaching the new product standards, including penalties for insurers that fail to comply with essential information requirements under the act. Then—listen to this—the minister said:

Chief executive officers and directors can be held personally liable only if they do not exercise due diligence in putting in place systems to ensure that insurers comply with the product standards.

I ask: where in all of this is due diligence by the government? Where is the increasing requirement, when there is more public money going out, to ensure that those who handle that money exercise due diligence and prevent fraud? It is not here in the legislation, and it ought to be.

I think the government will live to regret the fact that it is not making sure that, with two or three billion dollars a year going across to the private health system, there is not greater due diligence. There is less due diligence coming from the government itself. These are serious considerations, and the Greens will be pursuing the matter of that requirement if we are going have a pumped-up private health system which advantages all of us in here—we are all on over $100,000 a year—but leaves so many Australians vulnerable. It is our responsibility to ensure that there is greater due diligence, not less, and that the persons who are handling the money—not the products, but the persons who are handling the money—come under greater scrutiny.

I heard Senator Sterle say that 10 per cent of the money goes off to those persons but that there is not an obvious reason for that massive amount of money to be diverted into administrative costs when so little is ostensibly done by the private health insurance sector. That is a matter that requires, I think, a change of policy by the government, and it is something that the Greens will be pursuing. We Greens have consistently opposed the huge amount of public money being diverted into the private health insurance system and away from the public system because, as everybody in this place knows, the public system badly needs those funds. A fairer Australia would insist that the funds were directed to the public system and that the private system be there to compete without the government largesse that the Howard administration has poured into it. With that in mind, I foreshadow that I will move that these words be added at the end of the motion:

“but the Senate is of the view that the private health insurance rebate should be abolished and that the funds should be redirected to the public health system”.

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

I want to rise in this debate to support this Private Health Insurance Bill 2006 and related legislation and to indicate that I think it is a very positive and effective step in a number of directions. As the minister himself said in introducing this legislation, it is designed to be of benefit to private health consumers, private health insurance providers, private health insurance companies and the community generally. I believe that, on any of those tests, this legislation can certainly be seen as a step in the right direction.

I think it would be unfortunate if people listening to this debate were to draw the conclusion that the legislation that is before the Senate at the moment is in some way an adverse outcome for Australian health consumers. I heard Senator Allison, earlier in this debate, describe the legislation—I think she said this—as ‘an insidious step in the white-anting of our health system’. I heard a series of criticisms from Senator McLucas, and I heard the usual attacks from Senator Brown on the concept of private health insurance. It would be unfortunate if it were not recorded in this debate that the Senate Standing Committee on Community Affairs, which I chair, conducted hearings into this legislation. The committee heard a majority of witnesses before the inquiry—organisations as diverse as the Private Health Insurance Association, the Australian Medical Association and a number of organisations representing different areas of health consumption, such as motor neurone disease—affirm that they supported the direction of this legislation.

This is a good step towards creating flexibility for consumers of health services in Australia. Let me explain why. At the present time private health insurance in Australia covers a very significant number of Australians—something like 12 million Australians. It provides for a range of services to be supported through the payment of a premium. Those services tend, at the moment, to be concentrated on hospitals, particularly private hospitals in Australia. Despite putting on record the fact that private hospitals in Australia are of a very high standard and meet very important delivery outcomes for the people of Australia, it is nonetheless true to say that there is considerable room for those services to be diversified. For example, at the moment, if a person wishes to obtain dialysis, one might do so through a public hospital. If one has insurance, one might do so through a private hospital, but there are limited options, at the moment, for obtaining that dialysis in the private sector—such as in a community health setting or in a facility designed for that purpose, perhaps even in a doctor’s surgery. There are limited opportunities for those services to be provided to Australians outside hospitals.

We know that hospitals are important parts of our health system, but they are also very expensive parts of our health system. It is logical that we should consider ways of being able to shift some services out of hospitals—where that can be achieved effectively in a clinical and cost-effective sense and where benefits accrue to the community by virtue of that occurring. That is what this legislation is all about. It is about creating a more flexible health system where the users of private health insurance products are able to get a broader range of services that suit the needs that they bring to the health system.

That is essentially what this legislation does. I am sorry that there has been so much criticism of it in the course of the debate today, because the witnesses who came before the inquiry affirmed that they saw this as a positive step. There were some concerns about the way in which this will work, and indeed a number of witnesses suggested amendments to the legislation. A number of those amendments have been picked up by the community affairs committee and made as recommendations to the government to adopt. I look forward to those issues being examined seriously and effectively by the government.

I want to pick up on a number of points that were made in the course of the debate, to indicate why I believe this legislation, in its present form—with some amendments—needs to proceed. First of all, Senator McLucas made fairly strong comments about the possibility of this legislation resulting in increases in premiums. That is an unfortunate line of attack because, as we know, there has been a tendency for premiums for health insurance to rise. Those rises are very easily misunderstood and mischaracterised in the Australian community. Some people suggest that this is because the health system is out of control or because the government does not exercise enough control over the circumstances under which rises are allowed to occur and that this is somehow a sign of the system breaking down. Of course it is not any of those things.

Rises in health insurance premiums reflect the reality that the cost of medical services in this country, and indeed everywhere in the developed world, is rising. It is rising because new drugs are being discovered every day which alleviate conditions which previously were not treatable or not treatable effectively, new technologies are being applied and greater training is being employed to increase the understanding of the way diseases operate. All of those things have an effect on the cost of medical services.

It is frankly disingenuous to pretend that you can somehow, as a government, an alternative government or a minister for health, stand on the shore and hold back the tide of the rising costs of our health system. It is a reality which every government in the Western world is facing and which governments in this country will continue to face for some time to come. It does not mean you cannot adjust the system to decrease the pressure on health insurance premium rises, but nonetheless those rises will most likely continue to occur. The rate of inflation for medical services has historically been higher than the rate of inflation for other services and goods in the community generally. We cannot get away from that fact.

This legislation is designed to give us a more flexible approach to those issues, and it has the potential to result in smaller rises or even no rises at all. If services can be provided outside hospitals in community settings, for example, rather than in hospitals where necessarily costs are very high then there is a chance that those services can be provided more cheaply. By doing that, those services will be provided at less expense and with less pressure on health insurance premiums. That is a good thing, and we should welcome that and embrace the flexibility this legislation creates to achieve that outcome.

We had a general attack from Senator Brown on private health insurance, in the course of this debate, criticising the people who take out private health insurance—in fact, I understood him to be describing them as supporters of the government. He said that supporters of the government get benefits but the rest miss out. I would be very interested in taking a straw poll of which members of the Senate, including those on the other side of the chamber, have private health insurance. I suspect there would be a very large proportion who do. I think they would baulk at being supporters of the government. There are millions of Australians, who might not be described as supporters of the government, who nonetheless have made the decision to take out private health insurance. They do so because they see that they get value for money out of it.

No-one likes to see rises in premiums, and I do not think anyone believes a government or an alternative government that promise they can stop rises in premiums, especially if they do not outline how they propose to achieve that miraculous event. But nonetheless private health insurance is an important part of our health system and, most importantly, it takes an enormous amount of pressure off our public hospital system. If those 12 million or however many Australians were without private health insurance, there would be an enormous shift of demand onto our public hospital systems. I do not need to tell anybody in this Senate what tremendous pressure public hospitals in this country are already under, how underresourced they generally are and how they would simply not cope if they were dealing with not only public patients but also the private patients who are presently being assisted through private health insurance.

It is all very well for those opposite to bemoan the cost of the private health insurance rebate and to say this might be money better spent somewhere else, but the fact is: you cannot devise a system without it which does not result in tremendous pressure—indeed, probably intolerable pressure—on Australia’s public hospital system. It simply does not work. It particularly does not work if you are not prepared to outline what your alternative is. I say to those opposite: we are approaching a federal election. If you do not think the present system is working, tell us what you think will work better. Of course, we are yet to understand what that alternative might be; presumably, we will find out some time before Australians go to the polls.

Another issue raised by Senator McLucas in the course of the debate was a technical issue relating to the role of PHIAC, the Private Health Insurance Administration Council. She suggested that one of the criteria for PHIAC’s operation should be to reduce premiums or to prevent rises in health insurance premiums. I say to her, through you, Madam Acting Deputy President: that is on the face of it a reasonable suggestion, but when one delves a little closer one realises that there are problems with that proposition. The Private Health Insurance Administration Council’s role is to examine proposals for new products to be added to the list of those which are funded through private health insurance. If someone comes along and says, ‘I want to add this product of dialysis in a non-hospital setting; will you approve that?’ it is their role to see whether this makes sense, whether it is clinically effective, whether it will be a good service to provide to Australians and then, if it is, presumably to tick it off.

A consequence of adding new services to the list of things which are covered by private health insurance is—theoretically, at least—that costs increase as a result of that. You may have a new service which is very good and likely to be used but which will add to the cost of private health insurance premiums. None of us wants to see that, but we have to acknowledge that there is a trade-off between increased premiums and increased services on occasions. These changes propose to allow for Australians to get not just—let’s hope not—theoretically increased premiums but also better services at the same time. If that were the case, we would need to make a decision about how effective those additional benefits might be versus the cost of them. But, if PHIAC’s role were to minimise the cost of premiums, it would be in the difficult position of realising that new services might cost more and increase the cost of premiums, and it might be obliged on occasions to knock back those new services because they add to the cost of a premium. That would be an unfortunate outcome, particularly if there were people who wished to purchase those services. With respect to Senator McLucas and the Labor Party, that position looks superficially sensible but in fact it is others who need to make the decision about the effectiveness and cost of premiums, rather than PHIAC, the Private Health Insurance Administration Council.

Senator McLucas picked up on a suggestion made during the inquiry that the legislation needs to build in a protection for doctors’ clinical decision making—that that decision making needs to be respected and made central to the way in which the legislation works. I think there is a case for that. I do not doubt that the clinical integrity of doctors’ decisions needs to be preserved as part of the operation of our health system, but I am not sure that it has a role in respect of the way services are constructed for the purpose of offering a product through private health insurance—for example, it may be assessed as logical or cost-effective to not offer a certain service in the private sector, in a hospital or outside a hospital. A doctor may disagree. A doctor may say: ‘I think this service must be provided in the hospital. I don’t wish to have that service provided anywhere else but in the hospital.’ It is very hard to determine through the private health insurance process that a product should occur outside a hospital setting if a doctor or doctors are saying, ‘No, we have a different view about where that should be provided.’ In fact, I think it is easy to argue that there are different levels at which that decision making ought to occur that protects a doctor’s clinical judgement and that it should not occur at the level of this legislation.

There has been criticism about there not being enough indication within the legislation on issues such as informed financial consent. Senator Brown made criticisms about things that were not in the legislation. This is not legislation about private health insurance generally or about a range of services available to consumers; it is about increasing flexibility in this particular area of our health system. There is room for other legislation to deal with those issues if necessary.

I want to finish by saying that this legislation takes Australian health care into a new realm. It engineers a level of innovation, flexibility and choice which our health system needs. It is a heavily structured and regulated system. No-one should pretend, in looking at this legislation, that in some ways we are intruding into an area which is basically operated by the market; far from it. It is a system which is very heavily influenced by regulation, and this legislation seeks to make that regulation a little more flexible and to provide for new services to emerge in a setting that is appropriate for those new services. I think that is only to be seen as a good thing. Some testing of this new model is required, and I am sure that will occur. I have no doubt the minister is closely watching what happens with this legislation. I have no doubt that, if changes are necessary, they will be made. But I am confident that this is the right start. It is a very good step towards greater flexibility. It should, in some areas at least, reduce pressure for premium increases, and I look forward to seeing how effectively it delivers services to the Australian community.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The package of bills before us, and specifically the main bill, the Private Health Insurance Bill 2006, seeks to establish a comprehensive regulatory regime for the private health insurance sector and to replace the current regime. The other bills in the package provide for the transitional arrangements and consequential amendments to existing legislation.

Measures contained in the main bill, including those relating to Broader Health Cover, the provision of standard product information and changes to Lifetime Health Cover for consumers with 10 years continuous cover, represent a significant change to the private health insurance sector. Labor has stated that it generally supports the bills as they are likely to result in considerable benefits to the 44 per cent of the Australian population that currently have private health insurance. They are also likely to provide some benefits to the 40 per cent of Tasmanians that have invested their hard-earned funds in private health insurance.

In saying that, it is important to note that the benefits contained in this bill will not be accessible for the majority of Tasmanians, who are statistically less likely to have private health cover because of their locality and status as lower income earners. However, Labor supports those measures in the bill that will assist those people with private health cover, particularly the provisions relating to Broader Health Cover and standard product information. Under Broader Health Cover, private health insurance funds will for the first time be able to provide cover for many medical services provided outside the hospital setting by facilitating funds to provide cover for out-of-hospital services that either substitute for in-hospital procedures, such as chemotherapy and dialysis, or are designed to prevent hospitalisation in the first place.

Broader Health Cover represents a necessary step forward in the provision of health care—likewise, the standard product information requirements, under which private health insurance funds will be required to produce standard information statements for their products, should go some way to helping consumers make informed choices and be more aware of their exact entitlements under their particular scheme. Hopefully, consumers will no longer have to sift through numerous forms and documents to try to figure out their entitlements, as has previously been the case, nor will they be caught stranded by having to pay for services they thought were covered by their scheme. However, while Labor tentatively welcomes such changes, it has several significant reservations about the bill and the government’s approach to health care in general. These reservations were shared by several witnesses who gave evidence at the public hearing and are refected in the recommendations handed down in the report of the Senate Standing Committee on Community Affairs.

Labor’s primary concern relates to the implications of the bill and not the specific content. While Labor supports the benefits that the bill will promote for those Australians with private health insurance, it is concerned about the implications for those Australians without private health insurance, who make up the majority. The expansion of the range of services and benefits that can be accessed under Broader Health Cover means that people with private health insurance will logically have greater access to a wider range of health services than those who do not. This is likely to result in the creation of a two-tiered health system in Australia, where those people who can afford private health insurance will have greater access to a wider range of services and benefits than those who cannot.

People who are without private health insurance will be restricted to the services and benefits covered by Medicare, whereas those who have the capacity to purchase private health insurance will have a greater range of choice and, under Broader Health Cover, will have the ability to access out-of-hospital services as well as preventive health programs. This situation seems to produce an illogical result, as research shows that people who can least afford private health cover are the ones who would most benefit from it. People from lower socioeconomic backgrounds are more likely to suffer from certain generally preventable conditions such as obesity and heart disease, which could possibly be avoided if they were able to access preventive health services. By choosing to make these improvements and offer these benefits in the private rather than the public sector, the government has paved the way for the further commercialisation of the health system, whereby access to services is determined by a person’s capacity to pay. While beneficial to people with private health insurance, the provisions are aimed at ‘consumers’—to quote the minister—not the Australian public as a whole, and definitely not at those who need it most.

These concerns about the bill were shared by the Centre for Health Economics Research and Evaluation, who noted in their submission that the bill will:

... create greater complexities ... between the public and private health systems ... enabling service providers and health care insurers to respond with practices that segregate those with health insurance and those without ...

Labor is also concerned that the bill does not provide enough protection for doctors’ clinical independence—another concern which was expressly shared by groups such as the Australian Private Hospitals Association and the Australian Medical Association, who provided evidence at the public hearing. While the bill does provide for safeguards under clause 172-5, these groups considered this safeguard to be too limited. The AMA expressed concern that under the bill there remained real risks that health funds may seek to interfere with clinical decisions made by doctors in relation to patient treatment, such as whether a patient needs to be treated in hospital. They stated:

A broader, more realistic guarantee of no interference in clinical management and clinical decision making ... is necessary. The existing guarantee is too limited.

The APHA shared the AMA’s concerns and recommended that ‘the protection of clinical discretion should be a requirement of all agreements between health insurance funds and all service providers, including hospitals’.

Concern about the threat posed to doctors’ clinical independence resulted in the committee recommending in its report that the provisions in clause 172-5 be independently reviewed four years after the act has commenced, in order to ensure that the implementation of Broader Health Cover has not resulted in any reduction of clinical oversight of patient care or any negative impact on the quality of health services. While Labor supports an independent review of the clause, it believes, as stated in the additional comments attached to the committee report, that the clause should be broadened now to cover all other circumstances in which doctors’ clinical independence may be threatened—such as hospital purchase provider agreements and those that arise from Broader Health Cover arrangements. Labor believes that it is better for the government to have a broad safeguard in place to cover such situations than for it to sit on its hands and wait until something goes wrong. This is what is likely to happen if the clause is not amended and is reviewed only after four years. Labor also included in its additional comments a recommendation that the bill should contain the specific objective of minimising private health insurance premium levels, either in the PHIAC’s objectives or as an explicit responsibility of the minister.

The government claims that the bill will not have an impact on premiums. In fact, in his second reading speech the minister went so far as to state that some of the changes contained in the bill will actually reduce pressure on premiums. However, logic dictates that if the changes contained in the bill will result in funds offering cover for a broader range of products and services then consumers will be expected to pay more. The changes, while in theory beneficial to consumers, will naturally result in an increase rather than a decrease in premiums in the short term. The last time the government said that one of its policies would result in a reduction of pressure on private health insurance premiums was in 2000-01. Since then, there has been a 40 per cent increase in premiums. Between 1998 and 2006, the cost of private health insurance has increased twice as fast as general inflation. Given this track record, it is unlikely that these new changes to the private health insurance regime will result in anything other than an expansion of scope of business for funds and increased costs to consumers.

Any increase in premiums is likely to result in further pressure being put on Australian households with already tight budgets. Figures show that Australian households, particularly families, are already squeezed from many directions by the government—with the average mortgage repayment consuming 32 per cent of family income and recent figures showing that childcare fees eat up as much as 17 per cent of family weekly earnings. Combined with persistently high petrol prices and the ever-looming threat of a further interest rate rise, any increase in private health insurance premiums will hurt Australian households and make private health insurance even less affordable for families.

Labor generally supports the legislation because of the obvious benefits it will afford to those Australians with private health insurance. However, we believe that, at a minimum, amendments need to be made to broaden the protection of doctors’ clinical autonomy and to provide a guarantee against further increases in premiums. I wish to reiterate that Labor is concerned about the effects that the legislation and, more importantly, the government’s decision to pursue changes to the healthcare system through the private rather than the public sphere will have on Australians who are without private health insurance. This legislation sets the stage for the creation of a two-tiered health system where access to health services will be determined by the ability to pay, not by need.

The minister made an undertaking that he would carefully consider the recommendations made by the committee and the concerns raised in the committee hearings. I urge him to consider the issues that I and many of my colleagues have just raised. Access to and the cost of health care in this country is an issue for all Australians, not just ‘consumers’ of private health insurance. The fact that the government has chosen to improve the delivery of health services through the private rather than the public sector proves that it is out of touch with the needs of the majority of Australians who do not have private health cover. Why should only those who can afford private health insurance be the ones to benefit from changes such as Broader Health Cover? Why shouldn’t every Australian have equal access to out-of-hospital and preventive health services? Once again the government has overlooked the people who are most in need of such services.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to speak on the Private Health Insurance Bill 2006 and related bills. This is important legislation and includes many changes to our current system. The provisions in this package will provide benefits for 45 per cent of Australians—and, for this reason, it has my support. This bill represents a significant change in the way we view health care. Under these new proposals, private health insurance members will have cover for services outside the hospital. Furthermore, the Broader Health Cover provisions will allow funds to offer their members coverage for services which may prevent an episode of hospital care. There is strong evidence that the overall level of community health will be improved and the total cost of the health system minimised if we focus more on preventative health measures and early intervention with those most at risk of developing illnesses. Therefore, this legislation is, in principle, a step in the right direction.

I do, however, have many concerns regarding this legislation, which I will discuss here today. Firstly, the government has said that this package will not have an impact on premiums. Tony Abbott argued in his second reading speech that provisions in the package may even reduce premiums. I wish to remind the Senate that in 2000 and 2001 the federal government said that there would be downward pressure on premiums, yet Australians have suffered a 40 per cent increase in premiums since then. Between 1998 and 2006 the cost of private health insurance increased twice as much as general inflation, and this is unacceptable. If Medibank Private is sold, there is a real possibility that private health premiums will rise even further.

The fact is that the government cannot be trusted on private health insurance premiums. How can private health insurers expand their services yet cut premiums? Even if the private health insurance companies do save money on preventative programs, such as weight loss programs, to avoid a hospital stay, these savings will not be passed on overnight; it will take time for these savings to flow on. Under the National Health Act, one of the objectives of the Private Health Insurers Administration Council is to minimise premium levels. In the Private Health Insurance Bill as it stands, this objective has been removed. Why will the government not include this consumer protection?

The potential increase in private health insurance premiums as a result of this package will certainly have a negative financial impact on families who have private health insurance. Of grave concern to me are the individuals who are just over the $50,000 threshold—the point at which the government requires individuals to take out private health insurance or suffer further tax if they do not. The government needs to lift its threshold to accommodate the average real wage increase from $36,000 to $54,000.

Secondly, the last budget included a massive $55 million over a period of four years to increase consumer awareness of the incentives and benefits associated with private health insurance. This is a gross misuse of taxpayers’ funds. It would have been of greater benefit to the public to direct those funds into our ailing health system. Fifty-five million dollars could have been used to buy equipment for our hospitals and to train more staff. How can the government justify spending this amount of money on advertising? It justifies spending this amount of money on advertising because it has done it for the last 11 long years.

Tony Abbott has failed to address the huge challenges facing Australia’s ailing health system. Quality health care is unaffordable for many Australian families. Tony Abbott should be trying to cut the huge waiting lists in the public health system and he should be trying to find a way to attract and retain doctors and nurses. Instead, Tony Abbott has been throwing mud at Mr Rudd. This Howard government is all about providing for the few at the top with no regard for the little guy. The Howard government governs for itself and not for the country.

There are many benefits associated with having private health insurance, such as flexibility and choice regarding treatment, less waiting time for some procedures, access to the best quality care and general peace of mind. But these benefits are not something all Australians can afford. While this package will benefit the 44 per cent of Australians who can afford private health insurance, the legislation does not provide insurance for the majority of Australians who do not have private health insurance. I am concerned that people who are uninsured will not have access to the best quality services.

A Labor government will secure the future of our healthcare system and, in particular, ensure that the private sector plays a valuable role within that system. The public and private sectors are being placed at risk by the Howard government’s sale of Medibank Private. The bottom line is that Australia needs both public and private healthcare systems to thrive. Australians understand that private hospitals provide a range of specialist surgical and elective procedures while, typically, public hospitals treat emergency patients and patients with acute conditions—a burden they continue to shoulder.

This means Australians need both the public sector and the private sector to thrive. A policymaker who has thrown up their hands in despair of the public system cannot turn their back on it now and solely focus on the private system to solve the mixed system’s weaknesses and downfalls. Rather than address the real policy challenges required to create thriving public hospital and private hospital sectors, the government is obsessed with selling Medibank Private. This is unacceptable to me and unacceptable to the Australian public.

Support for private insurance is discriminatory against those who pay for their own care. Twenty-one per cent of recurrent healthcare expenditure, to the tune of $16 million per year, is paid from the consumer’s own pocket. This proportion is rising steadily. This legislation does not provide for any quality insurance mechanisms for Broader Health Cover to take effect until July 2008. I believe it is an unacceptable risk to have a 15-month wait for the implementation of quality standards. We should delay this legislation until we can be sure that quality standards are being enforced.

I strongly support the requirement for private health insurance funds to provide consumers with standard product information. This will be of significant benefit to our consumers. Labor believes that better informed healthcare consumers will participate more actively in the health decision making process, which would lead to a reduction in the incidence of adverse effects, foster a greater partnership approach between consumers and providers and increase consumer satisfaction with the care provided.

Debate interrupted.