Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Hansard source

The Health Care (Appropriation) Amendment Bill 2008 will increase the appropriations of the state and territory governments under the Australian healthcare agreements by $10.25 billion. Of the $10.25 billion appropriated by the bill, $9.7 billion is to be spent under the Australian healthcare agreements and half a billion dollars is to be spent directly on public hospitals. Health inflation is roughly accepted to run at approximately 4.1 per cent per annum. Hospital inflation runs at approximately 4.8 per cent per annum. Therefore, this increase is, at best, keeping pace with inflation. It is certainly no windfall gain for the public hospital system. The states and territories will have their work cut out for them. The state run public hospital system is in a state of chaos, and in some places it is getting worse by the day. Labor state governments make a profession of fudging hospital related statistics.

Even the official statistics are sobering reading, if you can find them. According to the State of our public hospitals report from June 2007, the average waiting time for all procedures was up to 61 days here in the Australian Capital Territory. Just over half the people in emergency departments are seen within the recom-mended waiting times in most states. In Tasmania, nine per cent of people have waited over a year for their surgery.

The true story is probably far worse. You cannot open a newspaper today without reading about a patient who has been waiting for over a year for elective surgery. In every state we hear about patients waiting for months and, when they turn up to have their long-awaited operation, it is cancelled at the last minute due to bed closures, theatre closures or a general shortage of hospital beds. Take, for example, those sitting around on the interminable waiting list for a total hip replacement. Arthritis of the hip to the point of requiring a total hip replacement is an agonising condition. I know a number of people who have gone through it. Patients depend on serious and sedating painkillers. They are obviously curtailed in their daily activities. Having a shower, doing the shopping or caring for grandchildren become incredibly painful endeavours.

The so-called access block, which is a lack of hospital beds, is the biggest threat to patient safety in the hospital system. When hospitals reach their critical mass of 85 per cent occupancy, things have a propensity to go pear shaped, and yet for too many Australian hospitals over 85 per cent capacity is the norm. Hospital managers are under pressure to reduce bed numbers but increase occupancy rates to improve operational efficiency. This just flies in the face of good research which has shown that overcrowding in the hospital system causes the average hospital stay to lengthen. This is bad for patients and a double-whammy for the budget. Of course, the Prime Minister said he will fix all this because the buck stops with him. The fact is that an overcrowded hospital is an unsafe hospital. Overcrowding will inevitably lead to unnecessary patient deaths and poorer patient outcomes. In fact, some studies have shown 43 per cent higher death rates for patients in overcrowded hospitals, but the Prime Minister said that he will fix all that because the buck stops with him.

Waiting lists for public hospitals are unlikely to get any shorter in the near future. In fact, quite the opposite is true. With the Prime Minister’s direct attack on private health insurance, more and more Australians will rely on state run hospitals to have their healthcare needs met. So, far from the buck stopping with the Prime Minister in relation to hospitals, he is worsening the situation by taking a baseball bat to private health insurance. This is all despite promises by the Prime Minister that he supports private health insurance generally. His true agenda is now revealed.

In introducing the new higher Medicare levy surcharge thresholds in the 13 May budget, the Prime Minister did indeed take a baseball bat to private health insurance. The Medicare levy surcharge formed part of the coalition’s three key policy pillars to support private health insurance. Those are: the very successful private health insurance rebate, the Medicare levy surcharge and Lifetime Health Cover. When we came to office in 1996, health fund membership was taken up by 35 per cent of the population. Public hospitals were struggling under the burden of patient numbers and insufficient funding. In 1997 the then coalition government introduced the Medicare levy surcharge. The MLS is an additional one per cent surcharge on taxable income. It is imposed on those earning above a certain threshold income who are eligible for Medicare but do not have hospital insurance with a registered health insurer. The MLS is in addition to the normal 1½ per cent Medicare levy.

The income thresholds above which the MLS kicks in are currently set at $50,000 for singles and $100,000 for families. It is an incentive for those who can afford to contribute to their own health care to take out private health insurance and alleviate some of the pressure on the public hospital system. This measure initiated a pattern of increases in private health insurance memberships that has continued to this day. In January 1999 the government introduced the 30 per cent private health insurance rebate. Australians who agreed to make a contribution to the costs of their own health care were subsidised by the coalition government to the tune of almost one-third of their total private insurance premiums.

In 2004 we introduced loadings on the rebate for older Australians. This amendment saw the rebate increase from 30 to 35 per cent for persons aged 65 to 69, and 40 per cent for persons aged 70 and over. This measure again saw a further increase in the uptake of private health insurance, but the coalition in government recognised that more needed to be done. Therefore the third pillar, Lifetime Health Cover, was introduced in July 2000. This measure made it worth people’s while to join health funds earlier and to stay members. Under Lifetime Health Cover, Australians aged over 30 who remained uninsured after July 2000 had their future insurance premiums subject to a two per cent surcharge for each year of age that they remained uncovered. So, for example, a person aged 40 who purchased health insurance for the first time in 2004 became subject to a 20 per cent surcharge on their current and future premiums. That is the difference from the age of 30, which the Lifetime Health Cover measure sets as the base, and the actual age of assumption of cover. If the same person delayed purchasing health insurance for a further 10 years, the surcharge would go to 40 per cent. The Lifetime Health Cover surcharge is capped at a maximum loading of 70 per cent. Australians born prior to 1934 are exempt. In addition, people in Lifetime Health Cover can take a two-year period of absence without incurring a higher premium.

Together, these policy pillars led to the highest number of Australians in private health insurance in the history of the country. In fact, the latest figures from the Private Health Insurance Administration Council show that 9.477 million Australians, or 44.6 per cent of the population, now have private health insurance. Of course, that was before the Rudd government took a baseball bat to private health insurance by changing the Medicare levy thresholds. Because of the raising of those thresholds, up to a million people will drop out of private health cover, according to an Access Economics report commissioned by the Australian Medical Association.

It stands to reason that those who will be the first to step out of private health cover will be those who can afford it least and are benefiting least from the cover. They are the young and the fit, struggling with high interest rates, high fuel costs and high grocery prices. As these people leave the private healthcare system, premiums will increase. This will see a further exit from the private health insurance system. We will see the cost of insurance spiralling and ultimately this will have to be borne by policyholders. Let it be stated clearly: premium increases from next year will be the Rudd premium increases in private health insurance. They will be the direct result of this government’s changes to the Medicare levy surcharge. I can guarantee you, Mr Deputy Speaker Andrews, that we will do everything we can to point out to the 9.4 million Australians with private health insurance that their premium increases are a direct result of the policy initiatives of the Rudd government in their first budget.

As these people leave the private health care system and premiums increase, there will be people who will be left behind. Firstly, it comes down to a very difficult time for health insurers generally. Roughly half of the income of insurance firms comes from investments in various markets, such as the stock market, the property market and a range of other financial instruments. The stock market and property market corrections have seen these investments lose value, and that of course will have an impact on the investment income for a lot of these funds.

Currently the health funds industry’s net margin is 5.6 per cent. Raising the Medicare levy surcharge will put a lot of pressure on funds’ reserves and hence their investment portfolios to cover the gaps left by departing members. So they have all the whammies coming together: the whammy of decreasing membership, the whammy of poor investment returns and the third whammy—the fact that their customers are under increasing financial pressure with rising grocery prices, rising housing prices, rising interest rates and rising fuel costs. So not only are the health funds under pressure but their members are under pressure. You have to ask yourself: ‘What is the impact, for example, on a pensioner earning $273 a week who is desperate to keep his or her private health insurance? What is the impact on that person of a premium increase of 10, 12 or 14 per cent directly a result of the Rudd government policy initiatives?’

Until now the government that promised so much in accountability and transparency has refused to table Treasury modelling which would throw light on how these changes will impact on our health system. Whether, as the Treasurer told the National Press Club, it is 485,000 Australians who will quit private health insurance, or, as Access Economics asserts, the number is closer to one million, the impact is similar. The public hospital system will be flooded with new customers. If these people are not taking responsibility for their own health care, they are going to go to the universal coverage provided by the public hospital system. And if the public hospitals are under pressure now, then how about another half a million to one million Australians queuing up at the door over a period of time because they would have previously gone to a private hospital but now they are going to the public hospital?

You can actually understand in pretty simple language what the impact will be on the public hospitals of the Rudd government initiatives on private health insurance. Given that is the case, this is an almighty cost-shift. Let us just go back to when the private health insurance initiative was announced by the Treasurer. The government is very big on spin over substance. They are very big on trying to con the Australian people. I know ‘con’ is a serious word, but it is a confidence trick. For example, they pretended that the alcopops tax was a health measure. In the budget papers all was revealed—that they were going to raise $3.1 billion from their so-called health measure. In fact, all of the evidence coming out now is that young people are turning to alternatives. Even a report released yesterday came out with further evidence that young people are turning to bottled spirits and wine based equivalents of alcopops. If you ask any liquor shop owner or publican they will tell you that they are seeing an increase in sales of alternatives to alcopops, yet the government claimed that this was about health—about binge drinking. If you look at the national alcohol and drug surveys, alcohol consumption by young girls has actually stabilised or decreased over the last eight years. But the government failed to mention that. The government failed to mention that this was not a health measure but that in fact it was a revenue-raising measure which they were parading as a savings measure.

I digress a little bit, but I always thought a savings measure was when you saved money by not spending money. But, instead, this government is dressing mutton up as lamb and pretending that the savings measures in the last budget are all savings, reducing expenditure, when in fact they increased expenditure in the last budget. They did not grow it as fast as previous budgets may have done, but they did increase expenditure with the net result that they needed to have so-called savings and the savings measures turned out to be tax increases—which, ironically, they did not tell the Australian people about.

So, coming to the great example of the government’s own program with the Medicare levy, they tried to paint it as a tax cut for battling families. That is what they paraded it as on a Saturday morning, with strategic leaks to the media: ‘We’re giving tax cuts by increasing the Medicare levy surcharge thresholds. We’re giving these great tax cuts to the punters. Gee, we’re generous.’ I though to myself, ‘Why would you announce that only a few months after you had promised $35 billion of tax cuts?’ Why would you announce a further tax cut given that there is an argument that tax cuts are stimulatory? I thought to myself, ‘Maybe they’re saving some money.’ And lo and behold, when the budget papers came out we could understand that they were projecting a massive saving to the budget of in excess of $950 million, because they will be paying out the 30 per cent private health insurance rebate to fewer people. So in this situation they are trying to make it a savings measure—and they did—by not paying the 30 per cent private health insurance rebate to as many people. So it is all smoke and mirrors. That is why I say that you have to look carefully at what the government does, not what it says.

I want to give another example of a key area where the government’s policy initiative will actually put more pressure on the public hospital system, not less. That is in relation to dental care and the government’s proposal to dismantle Medicare dental. Now, let us be very clear: Medicare dental saw 172,000 services delivered over its five-month life. They were not consultations or examinations. They were services—real dental work—and they were delivered to Australians with complex healthcare needs. These were the most disadvantaged Australians with the least ability to pay for dental care. With less than 10 per cent of the dental workforce employed in public clinics it will take a hell of a lot more than a fistful of dollars to get good dental care to these people and to meet demand.

One of the reasons we put dental services into Medicare was that Medicare, as an uncapped scheme, provides the sort of service that these people are after. As the last government, we had the capacity to do it and we did it. One of the first acts of this new government—and we will come to this in the debate on another bill—was to abolish the dental program in Medicare and to hand out vouchers to the parents of children under the age of 12 and say, ‘Okay, you can get a free examination but not one treatment.’ The first factor in relation to this is that the parents can find out that a child’s teeth are poor or that a child needs urgent dental work but there is no government funding to support that dental work. So if you are a parent and you get this voucher and you get the child’s teeth checked and they say, ‘Well, it’s going to cost $300 or $400 to get something fixed,’ what do you say if you have not got the money? Would you use that voucher?

The second factor is that a $150 voucher, which the government has laid down as part of the replacement for Medicare dental, may well not cover the costs associated with that initial examination. So 90 per cent of dentists operate in the private system and yet the government has taken away Medicare dental, which will help the patients who need it most. When they have huge queues in the public dental system obviously the only way to address it is to get more people going to the private system with government support, and this government has abolished that.

The government, overall, needs to do more to promote the health of Australians. Dismantling Medicare dental means only that more people will go to public hospitals. Dismantling—or, I should say, taking a baseball bat to—private health insurance means that more people will go to public hospitals. The Prime Minister said to Australians that the buck stops with him with public hospitals. He said: ‘Let’s end the blame game. The buck stops with me when it comes to public hospitals.’ We are going to keep the Prime Minister to that. We are giving him a lot of rope. We are allowing the Prime Minister to run this charade that he is fixing the public hospital system. We are not opposing this bill. We will be moving an amendment but we are not opposing this bill, because we want the money to go to the public hospitals. Let me point out that neither this bill nor anything else I have seen from the government is addressing the existing chronic shortage of funding in state hospitals but, significantly, it is putting additional loads onto state public hospitals.

I will make this final point. Prior to the last election, health minister Tony Abbott, the member for Warringah, announced an extra $18 billion that would be available in the new healthcare agreement from the government. That is a significant increase in funding. Firstly, that additional $18 billion would have been available to help the states address some of the challenges they have in terms of funding the state hospitals, but significantly it was going to be tied to better reporting by the hospitals, particularly in relation to data and performance of the hospitals across the states and territories. Secondly, the funding was going to be linked to some long-term goals associated with outcomes that the Australian people—patients, in particular—demanded of hospitals in a whole range of areas. That extra $18 billion which was available before the election has not even been referred to by the new health minister nor the Prime Minister. But the point I make is that there is a high bar that has been set for the Prime Minister and the health minister in relation to public hospital funding.

The second factor—and this is a very important factor—is that the Prime Minister said that, if he has not fixed the hospitals by 2009, there will be a referendum for the Commonwealth to take over the hospitals from the states. I want to say here in this chamber that we will keep the Prime Minister to that. We are not going to let the Prime Minister scurry behind the Health and Hospitals Reform Commission’s report, with its various interim reports over the next 12 to 18 months. We are not going to let him hide behind that as an excuse to say that he has done something for the hospital system, because he said not only that he would fix it but also, significantly, that if it is not fixed—if the outcome has not happened—by 2009 then he will have a referendum. We will give him the whole of 2009. He said that if he has not got an outcome on hospitals—if he has not fixed the hospitals by 2009—he will have a referendum to take them over. It is not good enough to say in 2009 that he has a plan to fix them. I can see this being set up by the Prime Minister already—that he has a plan to fix them, that he has had a report from a committee that was set up and has consulted widely and that it has got these great benchmarks. That is all pollywaffle. The Prime Minister said that the buck stops with him and that he will fix the hospital system by 2009; otherwise the Commonwealth will take over the hospitals. It was a dramatic statement at the time when he made it, and we are going to keep him to it.

There has not been a series of questions in the chamber from me to the Prime Minister about the buck stopping with him, because I think the Prime Minister and the government deserve the opportunity to try and fix the hospital system. There is not going to be unnecessary carping from me on the sidelines if, in fact, they really want to do that. But I do say that it is not good enough to make promises and not deliver. This bill does not deliver, and therefore I move the amendment circulated in my name:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House:

(1)

notes that the funding provided is a short-term solution to a growing crisis in our public hospitals;

(2)

notes that the Government through its changes to the Medicare levy surcharge is placing a massive additional burden on public hospitals which has not been taken into account in current funding allocations;

(3)

notes that the Prime Minister pledged ‘the buck’ would stop with him in relation to public hospitals and this bill does nothing to address that;

(4)

notes that there is no long-term solution in this bill for public hospital funding to meet inflation; and

(5)

notes further that there is still no consistent and reliable reporting mechanism provided by the States and Territories that allows comparisons to be made between hospitals across Australia.”

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