Claire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | Link to this | Hansard source

The opposition will be supporting the Private Health Insurance Legislation Amendment Bill 2013. I think people in the wider community know that Labor has always believed it is important to have a sustainable private health insurance industry in Australia. We know that over the last few years this has been a contested area. I am not sure, but I think several times in this place we have had private health insurance bills that have been debated quite robustly—I think that is the term we could use.

The indexation of the private health insurance rebate is something introduced by Labor. It is a budget initiative; it was introduced as a budget process. It is expected to raise about $700 million in savings over the forward estimates. The bill before us does not change that budget position. Basically, the bill looks at the way private health insurers make the calculation to apply the legislation that was previously put through. On that basis, I acknowledge the representations from insurers that the process we now have with the amendment will require less administration. But what is of even more importance is that the rights of policyholders are not undermined.

Consistently through our debates in this place we have been looking at the rights, the security and the engagement of the consumer. This industry in particular depends on people who make the personal choice to take up private health insurance, and I want to acknowledge the representations from the consumer organisations as well as from the insurers about this process. After all, it is a common goal that we make private health insurance work. The intent of this is that it will require less administration on the behalf of private health insurers and it will be easier to implement. The concepts and the arguments that have been put to us by private health insurers have made it clear that this is something they want. When Labor introduced the change last year there was a debate about whether the indexation should be calculated at the product level, as it was in the original process, at the industry level or at the individual insurer level. One of the principal concerns put by the then Department of Health and Ageing, currently the Department of Health, was that implementing the indexation at an industry level, as is proposed in this bill, would put smaller insurers at a competitive disadvantage. That was an argument that we took very seriously, and I think it is important to note that we have listened to people who have come forward with arguments. In the subsequent months smaller insurers, including the peak body, have put it to the opposition that this amendment will make it easier to implement and will require less administration.

The intent of Labor's proposed implementation model was that it would create greater competition and transparency for consumers. It is necessary, absolutely, for the government to demonstrate how this bill will increase transparency and competition. Labor will always support measures that enhance competition, which is consistent with our position that there be a sustainable private health insurance sector in this country. We are the party that is capable of improving competition, but standing up always for consumers.

The government is about promoting competition but sometimes we believe the roll and the absolute importance of consumers can get lost in the argument. So far the government has approved—and it is important to note this, Mr Deputy President—the biggest increase to private health insurance premiums in almost a decade, and this raises concerns about affordability for consumers. The government supports a private health insurance industry having greater involvement in the delivery of health care in Australia, but it is really important that any arguments about further engagement of the private health industry are not about breaking up Australia's system of universal health care and creating a two-tier health system, which exist in places like the United States.

This is an ongoing discussion because there are great concerns about maintaining the integrity of Medicare and a universal health system. We need to maintain the argument, which is more than just yelling at each other or taking entrenched positions; we must ensure that we have the maturity to listen to the arguments carefully to achieve the best possible system. The commitment and the respect that the Labor Party has for Medicare is on record; and that will continue to be part of any future debate. One of the things that colours the discussion is the likely sale Medibank Private. As a consumer of Medibank Private, I always put on the record that I have a personal interest in what is happening to the scheme, which I first joined as a Commonwealth public servant when the old Health Insurance Commission morphed into what we now know as Medibank Private.

In previous debates there has been considerable criticism by the coalition in opposition that the changes the Labor government introduced would undermine the integrity and security of the private health insurance industry and affect the number of people making the personal choice—it is important to acknowledge that it is a personal choice—to take up private health insurance. We know that there are a number of issues surrounding the legislation that encourage that choice; indeed, the legislation states that if you do not take up private health insurance or if you do not take extra cover as you age, there will be taxation implications. Nonetheless, we are always talking about a market industry, and so private insurance agencies and firms need to convince individuals that they have a valuable product to offer and that real choice exists in the market to provide them the options they need in the health system. Private health insurance must always be a market exercise, and that private choice must always be important in anything we do.

We know that at the moment 47.7 per cent of Australians have private insurance for hospital cover and 55 per cent have general cover. We need to keep those figures in mind, and in any debate we need to know that private health schemes are transparent, accountable and inform people precisely of their coverage. It is not in anybody's interest to have skyrocketing private health premiums; and that is something that this parliament and the Community Affairs Legislation and References Committees will continue to watch very closely. We are supporting this bill and we acknowledge the range of people who have been involved—especially the public servants in the department who have provided many valuable briefings and documentation which manages to explain complex matters. Amidst the debate it is very comforting to know that there are people in the department who are always available to provide information. Sometimes that will be at strange times of the night as, if I remember correctly, when working with the community affairs committee. Nonetheless, they provided the security that we had the information we needed. We welcome the fact that the private health insurers themselves have worked with both our government and the current government to put forward their case about how this indexation process will work. We support the legislation and we welcome it coming into place.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

I rise to support the Private Health Insurance Legislation Amendment Bill 2013. Following Senator Moore, I remind the chamber and those who may be listening that more than 10 million Australians have some form of private health insurance. It is critically important to recall the fact that these people come from all socioeconomic levels in Australian society and from all age ranges. Especially they are young married couples, young families, who have the challenge ahead of them and those at the other end of the age spectrum who will always be needing health services. Therefore, anything that interferes with the integrity of the private health insurance system must be observed with some degree of fear and apprehension. That is why I support the legislation.

Indexing the private health insurance rebate is one of several measures introduced by the previous Labor government which adversely affected Australians taking responsibility for their health through private health insurance. This legislation should help to address that. While the Private Health Insurance Legislation Amendment Bill will make indexing the government rebate simpler for funds to administer, the reality is that providers have been opposed to indexing because it may lead to a change in decision making by members of funds. Their premiums will steadily increase as the rebate diminishes over time, and that is of concern. It may lead funds to downgrade the quality of service and the level and breadth of protection that members currently enjoy, or people may drop their private health cover altogether, which is inevitably going to adversely affect their own health outcomes and place more pressure on the already overloaded public system.

That brings me to the objective, which is to simplify the current implementation arrangements for indexing the government's contribution to the rebate by amending the Private Health Insurance Act 2007. This creates a single adjustment factor under a legislative instrument, and I am pleased to see that the Labor Party is supporting this thrust by the government. It will be adjusted uniformly across all insurance policies on 1 April each year by a factor to be determined in accordance with the Private Health Insurance (Incentives) Rules. This is an incredibly important feature for administrative purposes and, ultimately, for those who have premiums. The adjustment factor will be a ratio representing the proportion of the increase in the CPI compared to the average private health insurance premium increase. That should give some level of stability.

It is interesting that at the moment—and this is advice from industry—there are over 34,000 policies on the market. The burden placed on insurers to comply with the application of a unique rebate for each policy type is estimated to be in excess of $15 million in implementation costs alone, and those costs inevitably go back into premiums. That is what we want to see stopped. The industry has advised that, according to minister, the bill will result in administrative savings of around 80 per cent of the cost of implementing the previous Labor government's Private Health Insurance Legislation Amendment (Base Premium) Act 2013.

All of these factors point to the need for Australians to remain in private health insurance funds and for them to be attracted to do so. Indexing private health insurance rebates has been the wrong way to proceed. This legislation at least improves the circumstance. It will simplify it, get it to a stage where there is a once-only annual change and, at the same time, it will encourage those who are already participating to remain in private health and encourage young people to come into the private health system.

I, like Senator Moore, hope that we will have a robust discussion about the future of our provision and delivery of health services in this country. I was in the United States during the three months of last year when the Obamacare issue was so hotly debated, and it all turned on young people signing up. As people unashamedly said, it is going to be the premiums paid by young people that will fund the system for Americans into the future. None of us want to see here the debacle that is currently going on in the United States.

I commend the amendment bill to the chamber.

Fiona Nash (NSW, National Party, Assistant Minister for Health) Share this | Link to this | Hansard source

I would like to thank members who contributed to the debate on this bill. The Private Health Insurance Legislation Amendment Bill 2013 simplifies implementation arrangements of the previous government's base premium measure.

The previous government's changes would have applied at a product level and would have effectively led to a different rebate for each policy type—cumbersome to administer and difficult for consumers to understand. This bill amends the Private Health Insurance Act 2007 to create a single adjustment factor under a legislative instrument. The rebate will be adjusted uniformly across all insurance policies each 1 April by a factor to be determined in accordance with the Private Health Insurance (Incentives) Rules. The adjustment factor will be a ratio representing the proportion of the increase in the consumer price index compared to the average private health insurance premium increase. Industry has advised that this bill will result in a significant administrative saving to the cost of implementing the previous government's base premium act. The bill is also making a minor amendment to clarify the definition of a 'restricted access group'.

In summary, this bill will reduce the complexity for consumers and alleviate a considerable administrative burden for insurers. The government recognises the importance of private health insurance as a pillar of our health system and respects the sacrifice made by many Australians to provide for their own health care.

Question agreed to.

Bill read a second time.