Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I want to begin by thanking Senator Duniam for his very passionate speech bringing to the attention of the Senate the outstanding work of Dr John Morris, whom I will admit was someone I was not familiar with, but it sounds like he made an outstanding contribution his family should be very proud of.

I rise specifically to update the Senate on the work of the Community Affairs References Committee into the Prostheses List, an ongoing inquiry that the committee has been working on. In doing so, I want to acknowledge the work of many senators and in particular Senator Stirling Griff, who brought this matter before the Senate and moved the reference itself.

There are really three different partners when it comes to understanding how the Prostheses List is being determined. There are the medical device companies—that is, the people who actually produce the devices themselves. There are the private hospital chains, which are effectively where you go to have your procedures. Then there are the private health insurance companies consumers themselves interact with.

There has been a lot of concern in recent times regarding the rising costs associated with these types of medical procedures. The Senate itself and the committee have been working hard to try to get to the bottom of why this has happened. Unfortunately, however, our ability to do that has been severely hindered by the inability of the committee at certain times to be able to access the relevant witnesses.

I want to note that this is a matter of public importance when you look at the over $6 billion in public funding that goes to the private health insurance rebate. This is not a matter that should be removed from debate. Again, there is a time and a place where private business acts privately and where I believe there should be a different level of public accountability. When there is such a large amount of public funding involved in supporting this industry, important transparency questions need to be asked.

I also want to note the absence of Medibank Private—the largest health fund, I believe, of its kind—from our hearings. I understand that they said that they were unavailable. I believe a new date has been set. I believe the committee has written a letter to them, outlining the Senate's powers insofar as summoning witnesses. This advice was provided to the committee by the Clerk. I hope they are powers that do not ever have to be exercised. Sometimes these powers in their non-use can be as effective as their use. The ACCC is currently investigating the behaviour of Medibank Private, which dates back to 2012. It is Australia's largest private health insurer. It has approximately 3.9 million members through its Medibank and ahm brands. Since at least 1 January 2012, Medibank—

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Dastyari, I need to remind you, just in case, that deliberations of committees are confidential until they are published. I am not necessarily suggesting that you have divulged anything from a committee.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I would be quite careful not to.

Stephen Parry (President) Share this | Link to this | Hansard source

Thank you. All I am doing is reminding you to make sure that you do not, because all of us need to be conscious of the confidentiality of committee business. Thank you, Senator.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My understanding, Mr President, and you may want a clarification of this, is that the advice I was given was that the decision to invite a witness is a decision that is a public decision; hence, the act of the invitation. The act of the invitation is a public act. The deliberation about whether or not to invite them—

Stephen Parry (President) Share this | Link to this | Hansard source

It does become public after the invitation has been issued, but in any event I am talking about the entire aspect of committee work. You know more about it than I do—and this is why I am in a very difficult position, because I do not necessarily understand the intricate workings of every committee, and nor should I. However, all I am suggesting is that you be cognisant of what is confidential in your business and what is not.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I will be, Mr President. You can go through the comments that I have made. I do not believe there has been anything in the information that I have given or that I am intending to give that will in any way, shape or form part of any private deliberation. In fact, the simple point of identifying this was outlined by the committee. That certain witnesses made themselves unavailable was a matter that the committee in its public hearing addressed.

Stephen Parry (President) Share this | Link to this | Hansard source

I will reflect on that matter, and you are now cognisant of it, as you have been—

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I always have been.

Stephen Parry (President) Share this | Link to this | Hansard source

and as I am, so you may continue, Senator Dastyari.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Medibank is Australia's largest private health insurer. It has approximately 3.9 million members through its Medibank and ahm brands. And since at least 1 January 2012, Medibank had agreements with many pathology and radiology providers who supply services to hospital patients. These services include blood tests, X-rays, CT scans and MRI scans—things we all use. Under these agreements, in situations where these providers charged above the Medicare Benefits Schedule, the MBS, fee, Medibank paid charges above the MBS fee, the gap, on behalf of Medibank and ahm members. Suddenly, from 1 September 2014, Medibank terminated or phased out these agreements. As a result of the agreements no longer being in force, since 1 September 2014 Medibank and ahm members have not been completely covered for in-hospital pathology and radiology services and have had to pay the gap as an out-of-pocket expense.

The changes have been estimated to have saved the company up to $24 million, and many customers became aware of the changes once they were admitted to hospital. The company braced itself for 'challenging calls'. The Medibank consumer guide from 2013 stated that it would inform customers of any policy changes in writing but failed to do so when making the $24 million worth of alterations. The guide said:

If we make changes that affect your cover in a detrimental way, we will let you know in writing prior to the changes taking place.

In our first set of hearings, there were a large number of private health insurance companies, including their peak bodies, who did make themselves available. Medibank Private was not available for that hearing, and I understand that arrangements are being made for them to present themselves at a later date. In addition, I want to note that it has become very difficult for the Senate committee to get to the bottom of its work on the prosthesis list when every single, major private hospital provider had made themselves unavailable for those hearings.

I also want to note the two largest private hospitals groups—the Ramsay group and the Healthscope group. In private comments to journalists, the Ramsay group repeatedly made an insinuation that the committee had not properly invited them to attend the hearings. Let me just say unequivocally that is false. There were repeated phone calls. There was repeated contact. There was correspondence that had been sent from the committee to Ramsay Health. Again, they would never put their name to it, but to try and spin in the media that they had not been properly contacted is a very improper insinuation about the professionalism of the Senate committee. Frankly, I think it is a matter that the committee may make a decision to address at a future point in time.

The idea that you can have a proper discussion about private health insurance costs and, in particular, the prosthesis list, without having the private hospital chains present is very difficult. I want to explain that the prosthesis list represents only 14 per cent of private health insurance expenditure for hospital cover policies compared to hospital benefits, which comprise 70 per cent of the costs, and the medical service benefits, which comprise 16 per cent of the costs. Given the government provides private health insurance companies with $6 billion in terms of the rebate, one could say indirectly—and it is indirectly—that the private hospitals are getting up to $4.2 billion out of it by the fact that they represent 70 per cent of the cost. Over the last nine years, the average prosthesis list benefit grew by four per cent, the average medical benefit grew by 17 per cent and the average hospital benefit grew by 38 per cent. I want to note that that in part does reflect the fact that some of the prosthesis prices, prior to that 10-year period, did have a sudden rise themselves. ABS data shows that over the past 10 years the average health CPI rise has been 4.6 per cent per year—again, a very, very high level of growth that is making it incredibly expensive for health providers. While that has been happening, the CPI for hospital and medical services over the past 10 years has risen by 6.2 per cent.

This is an important issue that the Senate is dealing with. It is an important issue that we need to get to the bottom of. Rising healthcare costs—a component of those being the increases that many families have been paying year in, year out on private health insurance—is a matter that, frankly, this Senate has demonstrated we can tackle in a nonpartisan way. The public has a right to know, and the public deserves to know, when the sum of money involved in supporting this industry in the next year is forecast to be $6.2 billion of taxpayer funds. Again, if we accept in a bipartisan fashion that it is an industry that warrants support, then we should be asking some tough questions about how we drive down those costs.