Monday, 27 May 2013
Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012, Private Health Insurance Legislation Amendment (Base Premium) Bill 2013; Second Reading
I rise to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012. This bill includes two changes to private health insurance coverage in Australia. First, the bill will restrict the private health insurance rebate from being payable on the component of private health insurance premiums with a lifetime health cover loading. This step represents a removal of a measure implemented by the Howard government in 2000 which significantly increased the number of people taking up private health insurance coverage. The second change ceases direct claiming of PHI rebates through the Department of Human Services and makes minor amendments to the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953 to reflect this change.
Firstly, I would like to remind the House of the real reason behind the changes today. What the Labor government is proposing today is to decrease the rebate for private health insurance, which will make private health insurance more complex and more expensive for more than 1.1 million Australians out of the approximately 12 million who currently have private health insurance. This, in turn, will disproportionately impact low-income earners. The Gillard government is doing this because it has mismanaged the economy. It has run out of money and broken its promise to deliver a surplus. So it is going to make already-struggling Australians pay more for health insurance in order to save $386 million over four years.
I could go on all day listing quotes from prime ministers Rudd and Gillard and the member for Gellibrand when she was Minister for Health. For almost a decade, they told the Australian community that they would not touch the private health insurance rebate and they told them of their commitment, their ironclad guarantees, not to cut the rebate. In 2009, when the member for Gellibrand was the health minister, she said:
The government is firmly committed to retaining the existing private health insurance rebates.
That was right before the minister twice tried to cut the rebate only to be rebuffed twice by the Independents.
In February last year the new Minister for Health, the member for Sydney, was successful in her attempt to cut the private health insurance rebate while at the same time significantly increasing the Medicare levy. This meant that more than two million Australians were made worse off, including more than 100,000 people who have private health insurance in the electorate of Ryan—as estimated by Private Healthcare Australia. Unfortunately, we know that this Gillard government has no qualms about breaking its promises to the Australian people. Today's bill represents yet another broken promise.
In total, Labor's broken promises amount to nearly $4 billion of cutbacks for Australians with private health insurance—the cuts in the Mid-Year Economic and Fiscal Outlook combined with the changes to means-testing. In today's bill Labor is cutting $386 million. It cut $2.8 billion by means-testing the rebate and $700 million in its announcement to limit the government's contribution to the rebate by the maximum of the consumer price index. At the same time, the Gillard Labor government has spent approximately $1 billion creating 12 new bureaucracies, which are immune to cuts, while it has been reducing funding not just for private health insurance but also for public hospitals and dental health by closing the Chronic Disease Dental Scheme. In this year's budget, the Treasurer cut over $1.8 billion from Medicare rebates, the extended Medicare safety net and the net medical expenses tax offset. There will be no increase to Medicare rebates between November 2012 and July 2014, which will mean that the continued growth in the cost of delivering health care will be passed on directly to Australian patients.
In December 2012, health funding from the federal government to the states was cut, including a cut of $103 million in my home state of Queensland. At the time, the Minister for Health in Queensland, Lawrence Springborg, indicated that that was equivalent to over 2,000 nursing jobs until the end of the current financial year. All state ministers are concerned about the total of $1.6 billion in cuts announced during MYEFO, as well as the cuts in today's bill. Ultimately, further cuts to private health insurance will place further strain on the already stretched public hospital systems and will cause the closure of public hospital beds and operating theatres and delays in elective surgeries.
As I have previously said, the Labor government's cuts have added further pressure on top of increases to prices and the cost of living. The Private Health Insurance Administration Council has admitted that 'exclusions and restrictions to private health insurance access have become much more prevalent' and exclusions 'may work against the policy objective of private health insurance in easing the burden on public hospitals'.
Many constituents have emailed me, such as Janice Johnston and Lynette Hitch, indicating their opposition to yet further changes to the private health insurance rebate. They say:
I have noticed some news recently around the changes to the Rebate for my private health insurance, and I want to ask you to be sure to vote against this.
I need the rebate to make health cover more affordable for me and my family, and I would not want to have to go onto public hospital waiting lists if I needed healthcare.
The rebate is one of the only direct benefits I get from the Government, despite working hard to pay for a better life for my family. Please don't make it even harder for me.
They also go on to say:
I am very surprised that there are more changes to my Health Insurance Rebate being debated in the Parliament. It seems to me as if every time the Government wants more money, I end up paying more for my health insurance.
If I am forced to drop cover for my family and myself because of the cost increases the changes will cause, I will have to go onto the Public Hospital lists, which are already stretched.
You can keep private health at a price I can afford by not allowing the changes.
These are the concerns of not just pensioners but struggling students, singles, families and self-funded retirees. They are already struggling with increasing cost-of-living pressures from electricity prices as a result of the carbon tax and huge increases in the costs of food and child care, and now the government is going to further punish Australians who want to take control of their own health care. These constituents can see that, while they are struggling, they have a government that is simply making life tougher.
This bill makes two main changes. Firstly, it restricts the private health insurance, or PHI, rebate from being payable on the component of private health insurance premiums with what is called a Lifetime Health Cover, or LHC, loading. The LHC was a measure that the Howard government introduced which resulted in a significantly increased number of Australians taking out private health insurance. The Lifetime Health Cover is a loading on private health insurance premiums that is applied at a rate of two per cent per year for every year that an individual is over the age of 30 when they take out hospital cover. The loading is an incentive, therefore, for Australians to take out private health insurance at an early age and maintain their cover.
Currently, the government pays the private health insurance rebate on the value of the total premium paid, including the LHC holding component. Therefore, by ceasing the payment on their PHI premiums, today's bill makes it even more difficult to maintain that PHI cover. At present, someone's LHC loading is removed after 10 continuous years of hospital cover, so there will be people who are very close to their loading being removed, having paid the loading in good faith and abiding by the appropriate rules and regulations. Now, the federal Labor government is changing the rules for ordinary Australians. Now they could be slugged with an increase of as much as 27 per cent in premiums, according to Private Health Care Australia.
The Senate Community Affairs Legislation Committee, to which this bill was referred in November 2012, released its report on 12 March 2013, including a dissenting report by the coalition senators. The coalition senators noted their concerns with the bill, particularly its adverse consequences for low-income families, its consequences for the affordability of private health insurance, the consequences for the operations of private health insurers and the consequences for increased pressure on the public health system.