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

As I was saying before question time, I strongly support the change to the Lifetime Health Cover scheme, whereby people who have retained private health insurance for over 10 years would no longer be subject to Lifetime Health Cover loading, even if they did not take out private health insurance before the age of 31. I also support the 30 per cent private health insurance rebate, as I am aware that many Australian families would not be able to afford private health insurance without it.

It is important that consumers have some input into which additional services they would like to be covered by private health insurance. This would ensure that the changes are reflecting Australians’ needs and priorities. I believe it is imperative that a range of health decisions start being made that focus on prevention measures and keeping people out of our clogged hospital system. This legislation can be the foundation for this to happen. Furthermore, allowing private health insurance to cover chronic disease management is certainly a solid step forward.

Labor believe that spending money on health is important, because we care about people and we care about improving the health system. However, we believe that spending on health has to be managed well to ensure that every dollar is spent well. Under this legislation proposed by the Howard government, only people who can afford private health insurance will benefit. What about everyone else? Everyone else has been put in the ‘too hard basket’, which is a testament to the last 11 long years of this arrogant Howard government.

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

It is a pleasure to follow my colleague, Senator Polley, in this debate on the Private Health Insurance Bill 2006 and related bills. A number of Labor senators have contributed to the debate on this legislation, but only one coalition senator has made a contribution; that is, Senator Gary Humphreys. He challenged us to say what the bill was about. Mr Acting Deputy President, in my contribution, I will tell you what the bill is about. Labor will support this bill because we recognise that it has the potential to deliver benefits to a significant number of Australians—some 44 per cent of the population who have private health insurance. However, in offering our support, we on this side are urging a closer examination of the consequences of this bill down the track for those 56 per cent of Australians who do not have private health insurance—some of whom will never be able to afford that level of cover.

I think it is worth beginning my contribution by highlighting the fact that this is a government that has an ideological bent when it comes to universal health care. It simply does not believe that it should exist. The Prime Minister has a track record of bitter opposition to Medicare and would dismantle it if he had the opportunity to do so. In fact, in 2001, he told Sydney Morning Herald journalist Jennifer Hewett that Medicare—or Medibank as it was known at its inception—was a cardinal mistake.

The Prime Minister is all for a have and have-not Australia. If some Australians are falling through the cracks, as far as this government is concerned that is perfectly acceptable. We have seen it time and again—after a very long 11 years of coalition government. Work Choices is happy to deliver so-called choice to workers, but in reality this only works for those with the power to bargain; the rest must cop their AWAs sweet or be shown the door. Electoral legislation reforms introduced by this government make it easier to donate big money to political parties anonymously but disenfranchise the illiterate, Indigenous or simply time poor. Promises were made by this government on interest rates that paid lip-service to voters at the last election but, when it comes to the crunch, those same voters who put faith in the government’s empty promises are now pinching pennies or defaulting on their mortgages.

To a majority of Australians who benefit from universal health care, I think the idea that it is somehow a cardinal mistake is offensive. I think that every time the Minister for Health and Ageing gets up in the other place and proclaims that this government is Medicare’s best friend, even members and senators on the other side of the chambers cringe at the obvious doublespeak, because they all know the ideology of their Prime Minister, and that is one of opposition to universal health care.

On this side we are not opposed to the concept of private health insurance; indeed, we embrace it for its supportive role of the health system. The fact that 44 per cent of Australians have private health insurance is indicative, too, that the electorate is supportive of the system as well. This take-up rate is of course closely linked to the government’s Lifetime cover policy, which penalises people for delaying their private health cover beyond the age of 30 by levying an additional two per cent on their premiums for every year over 30 they were not covered. So, buoyed by that decision, the private health coverage of Australians is at the level it is at now.

With that level of people with private coverage, it is reasonable for them to be expecting value for money—and Labor supports this premise, particularly in the face of a rise in premiums of some 40 per cent since 2000-2001. That significant rise in premiums in fact corresponds to another empty coalition promise: that its Lifetime cover and 30 per cent rebate would put downward pressure on premiums. Forty per cent increases do not indicate a great deal of downward pressure on anything—apart from perhaps the disposable income levels of families who have been slugged with the rise in premiums. The Broader Health Cover component—

Kay Patterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Have a look at the premiums under you. They skyrocketed!

Steve Hutchins (NSW, Australian Labor Party) Share this | Link to this | Hansard source

The previous health minister is interjecting. The Broader Health Cover component of this bill will allow private health insurers to cover out-of-hospital services that substitute for or help to prevent hospital treatment. Labor has continually argued that we need prevention programs for public health issues such as obesity. The Broader Health Cover will in some sense go towards addressing health problems that ultimately become a heavy financial strain on the public system years down the track.

Of course, the commercial imperative for private health insurers to also take part in these preventative programs is to minimise their exposure to similar costs from their own members. This bill will allow insurers to cover hospital treatment, general treatment or a combination of both. The general treatment category includes disease and injury management and can include the provision of goods and services, but only those for which a Medicare benefit is not payable. This will have obvious benefits in broadening access to out-of-hospital treatments for chronic conditions that would otherwise be treated in hospital, and would ultimately have the effect of minimising such conditions and therefore the number of cases needing to be treated in hospitals.

As I indicated earlier, Labor takes no issue with the principles laid out in this bill in terms of Broader Health Cover. But where I and my colleagues on this side do share a great deal of concern is the establishment of a two-tier system. Broader Health Cover would provide an attractive series of benefits for members of private health insurers, but the question ought to be asked: what of those without private insurance? Under the current system, the distinction between private health insurance and the public health system can be a matter of choice of treating doctor or additional levels of comfort as well as support for some things like optical and dental. Essentially, these are all areas where the public health system does provide some cover—except perhaps for dental after this government abolished the national dental health scheme.

This bill proposes to broaden the range of those services to those that have not been traditionally provided universally. This essentially means that access to such services will narrow to either the people who can afford to pay for them outright or those who are covered by private health insurance—and, at current figures, that is far from the majority of Australians. Equity of access to health services should be a top priority of this government, but we all know it is not and, in seeking to improve the scope of private health insurance, the concerns surrounding that equity of access have not been addressed and indeed have been entirely dismissed.

Obviously treatment like dialysis and chemotherapy—two services flagged in this bill as examples of treatments falling within the Broader Health Cover—would still remain available to public patients. But other programs, such as disease prevention, which go to the heart of the thinking behind this legislation, could eventually become a service provided predominantly to only those with insurance. Where does this leave people without private insurance but who are equally, if not more, at risk of the same diseases?

While I am certain those opposite me in the chamber would argue this bill does not represent a shift in that direction, I think the weight of logic would indicate that it does. I challenge them to overcome their ideology and address these issues in committee. I know they do not believe that everyone should have access to health care, but, if they are serious about putting in place measures to reduce the future burden of health costs on the Commonwealth, they must confront the fact that people who cannot afford private health cover are those most likely to be unable to access programs that would prevent them going to hospital for treatment. As Australia ages, we must be looking at ways to reduce the incidences of preventable diseases before they become a serious health problem and subsequently a major cost to the public health system.

This brings me to the point of the affordability of premiums. As I stated earlier, premiums have risen by 40 per cent since 2000-01. It should be recognised that a component of this correlates to the rise in costs of health care, but, nevertheless, premiums rising at a rate of twice that of inflation is a significant cost to families. Under the coalition, health insurance premiums are one of a number of rising costs that families must deal with: childcare fees rising at four times annual inflation; interest rates rising eight times in a row; interest repayments doubling as a proportion of disposable income; HECS debts spiralling upwards; and petrol prices remaining historically high, part of which is motorists paying a tax on a tax to the Commonwealth. Add to all of that a 40 per cent increase in the cost of premiums over the last six years.

Those families have been given no guarantee from the government that premiums will not rise again under this new scheme. The minister has refused to acknowledge that possibility, instead putting faith in the streamlining of the regulatory environment that will come with this legislation placing downward pressure on the costs of private insurers and the follow-on effect that will have on premiums. But I think Australians will be excused for not taking the minister at his word, primarily because they did so in 2000 when the government introduced its Lifetime Health Cover initiative and the 30 per cent rebate, yet they have had to absorb a 40 per cent increase in their premiums since. Is the government serious about keeping premiums down? If it were, it would have given greater consideration to the issue in the drafting of this legislation, which contains no guarantees for consumers despite the rhetoric from the minister. If it were serious, it would not be intent on selling off Medibank Private. The government is not putting its shoulder to the wheel in terms of making sure families do not have to keep paying higher premiums. It would rather spend $50 million of taxpayers’ money funding advertising campaigns for the private health insurance sector instead of directing that money to better uses, such as improving the equity of access I spoke about earlier.

In the time remaining, I would also like to address some concerns that have been raised in submissions to the Senate inquiry into this bill regarding the issue of managed care. This was a much-maligned practice of the early 1990s—particularly in the United States but also, to a lesser extent, here—whereby private health insurers sought to limit costs by directly interfering in the clinical care of patients. More costly treatments usually performed in hospitals were being done on the cheap at home, and a substantial proportion of the cost was then borne by the patient or the patient’s family. While the overt intention of this bill is not for managed care, the AMA argued in its submission to the inquiry that the scope is there in this legislation. Private health insurers are given discretion in what is classed as general treatment and there is no stipulation of default benefits. The insurers can finance and provide the health care, which means they will necessarily want to minimise their costs—a decision directly affecting the level and quality of care.

Managed care has been widely criticised for compromising quality. In an examination of 58 surveys of American physicians from the late 1980s onwards, most had very strong and very negative sentiment towards the managed care system. A majority in most surveys felt that, while costs might be reduced in some circumstances, necessary tests were not being ordered. The nature of managed care is such that physicians contracted to the organisation are pressured to keep costs down and the first sacrifice can be quality of care. This is precisely the situation we want to avoid in Australia, and the warning has been sounded from the AMA and from Labor that the government needs to recognise that under this legislation there is the possibility for these schemes to emerge.

I would like to conclude my remarks by reminding the government that Australia has at its core the principle of equity. Labor support consumers having greater choice and value for money, but we do not want to see it at the expense of the less fortunate. If anything, this government has shown that its legacy after 11 years is one of division, but an incoming Rudd Labor government will restore the notion of equity to the decision-making process so that we do not become a country of haves and have-nots.

Nigel Scullion (NT, Country Liberal Party, Minister for Community Services) Share this | Link to this | Hansard source

The Private Health Insurance Bill 2006 and the related bills comprehensively deliver on the government’s commitment to bring about the next wave of innovation in private health care. The legislation, which is due to come into effect on 1 April, does two distinct things: firstly, it facilitates increased innovation and choice in private health care; and, secondly, it clarifies and simplifies the regulatory framework. These changes are consistent with the government’s commitment to a vibrant private health sector, but that is not an end in itself. Rather, it gives consumers choice and peace of mind in their health care. It also complements the public health system, which is underwritten by the universality of Medicare. The government has an ongoing and very strong commitment to Medicare. This legislation does not weaken that commitment in any way.

The bills give effect to the reforms announced on 26 April 2006 to: allow insurers to provide and include in risk equalisations benefits for out-of-hospital services under broader health cover, require insurers to provide standard product information to help people compare policies and understand entitlements, eliminate lifetime health cover penalties for those who have retained their hospital cover for 10 years continuously and provide a framework for the quality and safety of services covered by private health insurance. Broader health cover is the key change that will affect private health services. Hospital cover will expand to cover out-of-hospital services that substitute for or prevent treatment within a hospital. This is an important innovation that will transform chronic care management. It removes the barrier to the development of flexible products that better reflect clinical practice and better meet consumer needs.

The bills also consolidate the regulatory framework into one primary piece of legislation. The current system of regulation through conditions of registration is replaced by a transparent set of product standards. This will result in much clearer and simpler regulation of private health insurers and service providers. The government has continued to work closely with health insurers and service providers since the legislation was first introduced in December to improve the clarity and operation of the legislation. The government amendments that will be circulated shortly are the result of these ongoing consultations. They will help ensure that the various elements of the policy work as they are intended to.

The Senate Standing Committee on Community Affairs has also just finished scrutinising the bills. Following its review of submissions from interested stakeholders and a public hearing, the committee concluded that it supports the measures in the bills. We will be making some refinements in implementing the new framework to reflect the committee’s constructive suggestions. Most of the recommendations have been taken on board in an appropriate form. I should note here that in relation to the committee’s recommendations we will, after further consultation, incorporate the recommended care plan charter, a set of guidelines to assist in the relationship of services provided under broader health cover to those provided under Medicare in the statutory rules to ensure that they have legislative force as disallowable instruments.

While the legislation generally has been received positively, some incorrect claims have been made about what the package will or will not actually do. It is important now to put some points on the public record to assist in the understanding and interpretation of the legislation. First and foremost, broader health cover, which is the centrepiece reform element, will not disadvantage those Australians who do not have private health insurance. Broader health cover is about giving health insurers the legal framework to pay for clinically appropriate treatment wherever that is provided. It is not about creating a new set of services that only the privately insured will be able to access. Privately insured patients will now be able to have their treatments more conveniently in local clinics or more comfortably in their own homes, instead of having to go to hospital. It may come as a surprise to some, but in fact such arrangements have been commonplace in state run public hospitals since the 1980s.

Broader health cover will allow the private sector to follow the lead of the public sector in designing and delivering outreach services. There are many examples of outreach services already provided by the public sector. Broader health cover arrangements therefore will not disadvantage public patients. All Australians will continue to have equal access to hospital treatment as public patients and access to the wide range of treatments available under Medicare. We are doing nothing that stops states pursuing similar innovations of their own in relation to public patients; nor do the Australian health care agreements throw barriers in the way of states who wish to fund out of hospital patient services.

Secondly, related to the introduction of broader health cover, claims have been made that it will lead to further increases in private health insurance premiums over time. Broader health cover arrangements are not expected to increase pressure on premiums. They will provide cover for community based treatment as an alternative to treatment within a hospital setting. In essence, broader health cover will replace hospitalisation with care in other settings where it is clinically appropriate and convenient for consumers. This replacement means that broader health cover has some scope to reduce hospital costs and out-of-pocket expenses for consumers, which means over time downward pressure on premiums. The government is keen for consumers to be able to access broader health cover products. However, it will be a commercial decision for private health insurers in choosing whether to offer broader health cover.

Thirdly, it has been suggested that the legislation pays scant attention to quality and safety issues. The main bill introduces the first comprehensive safety and quality regime for all privately insured services, to take effect from 1 July 2008. This start date allows sufficient time for service providers to take a considered approach to the level of accreditation required and to get accredited. The timing allows the accreditation industry to spread its workload, rather than creating a huge administrative bottleneck. It will avoid current available accreditation arrangements potentially determining the shape of what is to come. It will also allow insurers time to develop and negotiate effective and quality based contracts for broader health cover with providers including, but not solely, medical practitioners and private hospital interests. The 1 July 2008 start date for the quality and safety regime has attracted undue attention. It is important to understand that insurers will continue to exercise care on behalf of their members as they do now in choosing who will deliver services. The public expects it and this government expects it.

Indeed, taking into account issues that emerged through the Senate committee inquiry, we will be incorporating provisions in the statutory rules to provide that there must be no diminution of existing quality and safety standards and regimes where they apply to services and providers operating under a care plan facilitated by an insurer. Where accreditation is now usual for such services in other contexts, it will be expected for relevant care plan services. These will be interim and transitional measures pending the commencement of the new dedicated accreditation regime.

Fourthly, elements of the medical profession have raised concerns about the issue of clinical freedom and whether the new private health insurance framework provides sufficient safeguards for it. The government wants to make very clear that clinical freedom—that is, the right of medical practitioners to make unfettered clinical choices—is very important. Decisions about clinical care are and will remain matters for patients and their doctors. There is nothing in the bills that gives insurers more influence over clinical choices.

The new legislation provides the same level of protection for clinical freedom as the current National Health Act. Furthermore, the government are unaware of any complaints from doctors about interference from health insurers under the current regime. If there are demonstrated grounds to review this in the future we will monitor implementation very carefully but, without hard evidence, it is not appropriate to act in a heavy-handed way. Conversely, however, it is up to health insurers to keep faith with medical practitioners and other providers, to reassure them and the public that patients will always get the care they need. The government have every confidence in them and are sure that their trust in the industry will be justified under this new framework.

Finally, concerns have been raised by the opposition about a change to the Private Health Insurance Administration Council’s objectives. The council is the prudential regulator of the private health insurance industry, although, through the administration of standards, the council ensures that health insurers have sufficient money to pay benefits to their members. Nothing will change. The council does not and never has had any power to minimise the level of private health insurance premiums. Control over premiums resides wholly and solely with the Minister for Health and Ageing, and it always has. The new legislation reflects this. The minister’s job is to ensure that premiums are kept as low as possible and that a fund’s obligations to its members and its prudential requirements around minimum reserves are always met.

The government are concerned that, as far as possible, we ensure these major reforms are introduced and implemented smoothly. I therefore foreshadow that the government will monitor the initial month of operation and are prepared to address specific difficulties that may arise in the spring sittings, with legislative adjustments as necessary. I am happy to give a similar undertaking on behalf of the government in respect of the operation of the statutory rules and regulations made under this legislation. I commend this legislation to the Senate.

Question negatived.

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

I move the second reading amendment standing in my name:

At the end of the motion, add:

                 “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”.

Question negatived.

Original question agreed to.

Bills read a second time.

Ordered that consideration of these bills in Committee of the Whole be made an order of the day for the next day of sitting.