Tuesday, 2 June 2009
Fairer Private Health Insurance Incentives Bill 2009; Fairer Private Health Insurance Incentives (Medicare Levy Surcharge) Bill 2009; Fairer Private Health Insurance Incentives (Medicare Levy Surcharge — Fringe Benefits) Bill 2009
It had not been my intention to speak in this debate on the Fairer Private Health Insurance Incentives Bill 2009 and cognate bills. I did make some comments on these matters in the Main Committee during the course of the debate on the appropriation bills and I had not intended to enter this debate. However, there have been so many people in this debate from the opposition who have made assertions based on a total absence of the facts that it compels me to once again make some of these points on the record. The first thing that I want to make clear, as a statement of potential conflict of interest, is that I am now and have throughout my adult life been a member of a private health insurance fund. I joined when I was still a student and I have been a continuous member of a health fund all of that time.
I think uniquely in this parliament, I have also spent about a decade on the board of directors of a health insurance fund. Not only have I been a consumer of the services, I have been on a board providing the service for others. So I have a fair idea of the way in which the system operates, and I have taken a keen interest over the years in the way in which support for people in the public and private health systems functions.
Sadly, the prejudice of those opposite is not supported by the facts. It is a terrible thing in politics when the facts do not support your prejudice but it is a wise person who decides to stop, consider the facts and readjust their prejudice. Hopefully, some of that will happen, although I do not hold out great hope given the performances I have heard to date.
There are two things that the former government did to try to increase the percentage of the population who were covered by health insurance. They were, firstly, to introduce a 30 per cent rebate and, secondly, to introduce lifetime health ratings. The member for Moncrieff, who has now left the chamber, made mention of the fact that under Labor the percentage of the population with health cover had fallen to about 30 per cent. Well, I have news for the member for Moncrieff. At the end of 1998, well after the election of the Howard government, the percentage of the population taking out private health insurance cover was 30.2 per cent. Under the Howard government the figure was sitting at 30 per cent.
The Howard government then decided, in January of 1999, to introduce a 30 per cent rebate on health insurance, which effectively was about a $2½ billion payment at the time to people like me who had health insurance cover. What was the effect of that payment of $2½ billion to people like me? How many more Australians did it encourage to take out health insurance? The answer is: virtually nil. Three months after that rebate had been put in place, in March of 1999, the percentage of the Australian population covered by private health insurance was 30.4 per cent—that is, it had risen by 0.2 per cent. There was virtually no effect on the take-up rate of private health insurance during the period after the introduction of the 30 per cent rebate. In fact, at 30.4 per cent, the take-up rate was actually the same as it had been six months earlier in September of 1998.
In September of 1998, six months earlier, the take-up rate of private health insurance was 30.4 per cent. So if you have a look at the figures three months before the rebate was introduced and three months after the rebate was introduced you find that there was absolutely no change at all. There was no change whatsoever. And even if you have a look further ahead—if you look at the end of 1999, after the rebate was in place for the whole year—and ask what the take-up rate was for private health insurance, you find that it was 31.4 per cent. At best, the most optimistic assessment—the most optimistic claims that those opposite could make—is that the private health insurance rebate encouraged one per cent of the population to take up health cover.
I made the comment at the time that those matters were before this parliament that I thought the move would have no effect, and that was based on my experience in the industry. I thought it would be a useless endeavour—that it would spend a lot of money without actually helping health funds or helping to increase the quality of health for Australians. I also made the comment that the problem that health funds have is not the premiums per se. The problem health funds have is not the percentage of take up per se. The problem they have is in the churning nature of the membership. People would often take out health insurance at the point in their lives when they thought they may have high costs of health—for example, when they were thinking of having a family. So when they were young, healthy and single they would not take out health cover. As they were contemplating having a family they would think, ‘Right, we’ll take out health cover because there are going to be some costs.’ They might take out health cover for a couple of years and then leave the health fund. That was not unusual. In fact, it was that profile of clients, which health funds had to deal with, that forced premiums up.
There will be a change. That is all it is. I understand that some people are going to have to pay more for health insurance, and no government of any political persuasion likes to make constituents pay more for anything, but there are times that you have to make those tough decisions. But to argue beyond that, as the Liberals do, that this is going to create an exodus from health funds so big that it is going to force premiums up and be a burden on the public system, is not supported by any of the known facts. It is not supported by what happened when the former government introduced what was then a $2½ billion handout to people like me. I was in health insurance all my life before that handout. Hopefully, I will be in health insurance for a few years to come. That payment made no difference to me and, as it turns out, the most optimistic claim you can make is that it made a difference to one per cent of the Australian population.
But then the government did actually do something which I had mentioned in my speeches at that time, back in 1998—and that was to introduce lifetime health rating. Lifetime health rating did make a difference, because that churning effect was halted. Those people who thought, ‘I’ll hop in for a few years and then hop out, and then maybe a few years down the track I’ll hop back in,’ all of a sudden realised that if they did that after they had reached a certain age it would cost them more. So they decided, ‘If I’ve got to pay more I might as well be in for the whole time and get the benefit of the lower premiums.’
So let us have a look at what happened when health ratings were introduced. Health ratings were introduced in July of 2000. In March of 2000 the population take-up in health insurance had risen to 32.2 per cent. A part of that was a take-up in advance. So it had increased from 31.4 to 32.3, in part because people were getting ahead of the July start-up date for the lifetime health rating system. When you go to June, immediately before it kicked in—the day before it kicked in—you find that that had increased to 43 per cent. That is a huge increase. Instead of 32 per cent you now had 43 per cent covered, and by September of 2000 that had risen to 45 per cent. In fact, since then the percentage has gone down. If you look at the most recent figures you find that the take-up rate of private health cover is now around 44.5 per cent—it has gone back slightly.
My point is that lifetime health ratings have had an effect on the take-up rate and that is not affected by anything in this bill. In no way does this bill touch on those matters. What this bill touches on is the health insurance rebate. The evidence is clear. This is not a question of conjecture. This is not a question of political ideologies. It happens to be a fact that the rebate did not have a noticeable effect on the number of Australians who took out private health insurance. That is it. A Liberal member is going to hop up next. That Liberal member will have a prepared speech that probably includes all the same rhetoric that every other Liberal has hopped up about, and that Liberal member will want to repeat all those falsehoods, but I hope they understand that what they are saying is not supported by the facts. The indisputable situation is that there is no exodus from private health funds from this. There is no massive burden on the public health system from this. There was no massive benefit from private health insurance funds when the system was introduced. Nor was there any great benefit to public health when it was introduced. There was a transfer of about $2½ billion from tax revenue to people like me. If governments want to do that, that is fine, but let us be honest in this debate. I am tired of hearing speaker after speaker on the Liberal and National party benches hop up and simply assert things without a shred of evidence when the evidence clearly demonstrates them to be untrue.
I heard the member for Moncrieff talking about class warfare rhetoric. The final point, which I repeat in conclusion, is that the class warfare rhetoric I have heard in this debate has all been on the other side. Let us not kid ourselves. People on this side of the House, just like me, have private health insurance. I do not think there is anyone on the other side of the House who can say they were on the board of directors of a private health insurance company for a decade. I think we have probably got as much right to claim support for these people as anybody, so let us just leave the class warfare rhetoric out of the debate from here on in and have a look at the facts for a change.