House debates

Wednesday, 10 February 2016

Questions without Notice

Private Health Insurance

2:43 pm

Photo of Sussan LeySussan Ley (Farrer, Liberal Party, Minister for Health) Share this | Hansard source

worked hard in the sugar mill, built his own company, invested in training, sponsored young people and now has decided to give back by coming into this place. He really is a standout performer.

The member for Hinkler asks me about private health insurance as it relates to his rural and regional constituents. Having visited his electorate, I certainly understand that his people live on low incomes, fixed incomes, and they do their best to hang onto their private health insurance. We know that the stronger private health insurance is in Australia, the stronger public health is—because we do not find that people who would otherwise rely on private hospitals come to the emergency department of our public hospitals.

The member asks about the current private health insurance reforms. Clearly, responses to my survey into what people think about the private health insurance product have revealed that the premium increases are going up too fast—six per cent, every year, year-on-year—affordability is a problem and the product itself is not meeting their needs. So we in the Liberal and National parties are looking at ways to make consumers happier with private health insurance to deliver a product that meets their needs and support the health system as a whole.

There is a website that the member for Hinkler might like to refer to—privatehealth.gov.au—which he specifically has asked about, where constituents can see: 'If I go to a certain private hospital what is the gap that I might have to pay and what hospitals will better meet my needs, depending on the type of insurance I have and the insurer I am with?' This is an area that was really talked about through our private health consultations, because transparency and the ability to know what exactly your policy delivers—when and how, and where the known or no-gap site is—is really important.

I have had a positive response from insurers to my request to start considering a lower request of premium increase, and we are working well with those insurers. We are also looking at the prostheses list, because the costs that private health insurers pay for devices is very high, in Australia, compared to overseas, and there are regulatory aspects that we are also interested in to help ease the costs for the system as a whole. Once again, I think that member for Hinkler and I look forward to my next visit to his constituency.

Comments

Tibor Majlath
Posted on 13 Feb 2016 10:13 am (Report this comment)

The Minister says "I have had a positive response from insurers to my request to start considering a lower request of premium increase, and we are working well with those insurers. We are also looking at the prostheses list, because the costs that private health insurers pay for devices is very high, in Australia, compared to overseas, and there are regulatory aspects that we are also interested in to help ease the costs for the system as a whole. Once again, I think that member for Hinkler and I look forward to my next visit to his constituency".

One could be forgiven for thinking that up till now, insurers received automatic government approval based on the Minister's recent comments even though the Minister is required to approve all premium increases, unless this 'would be contrary to the public interest' whatever that means. It is surprising, that the only mandatory reason to disallow an increase - the public interest test - was never defined exactly. It could be anything. However, the Minister is required to table reasons for not approving an increase. Difficult to find any evidence of that for the last eight years.

Under Health Minister Tony Abbott premium increases were approved in 2003: 7.4 per cent or +174 against 2.7% CPI; 2004: 7.58 per cent or +230% against 2.3% CPI; 2005: 7.96 per cent or +195% against 2.7% CPI; 2006: 5.68 per cent or +62% against 3.5% CPI. How many were knocked back?

Under Labor 2008: 5% or +14% against 4.4% CPI; 2009: 6% or +253% against 1.7% CPI. In Feb 2013, Health Minister Tania Plibersek approved an average 5.6% increase in premiums or +229 against 1.7% (2012) CPI which she claimed was only the price of a coffee. Were any requests not approved?

In 2014/15, Minister Ley approved requests for premium increases from a minimum of 3.98% to a maximum of 7.92% under a CPI of 1.7%. That is, 134% to 366% against the CPI. That is, health fund premiums rose on average by 6.18% or 264% over the CPI in April 2015, while the rebate was expected to rise by only 1.7 per cent. The CPI increase is/was around 1.7 per cent. How many requests were rejected? Don't know. Presumably all were eventually approved.

Did the LNP ever repeal the "budget cut by the previous Labor Government which enacted legislation that from 1 April 2014, the Government's contribution to an individual's private health insurance rebate would be indexed annually by the lesser of the Consumer Price Index (CPI) or the actual increase in the premium charged by insurers"?

The Daily Telegraph on 30 Jan. 2016, reported that Health Minister Ley said she was concerned the process used to approve premium increases didn't allow the government a rigorous assessment of an insurer's full financial position? What? Weren't we always assured that "each application is closely scrutinised to ensure the increases are fully justified"? It seems that the various Ministers could not have properly decided in any case. It always seemed that premiums were waved through by both Labor and the Coalition.

Now Health Minister Ley is rightly doing a review into the $19 billion sector, because of consumer concerns which she says are hardly surprising given that premiums have on average risen by 6% per annum for the last 5 years. Actually they have been rising way above inflation for much longer.

Of course, the usual reason given for massive increases in premiums is that average payouts have been rising faster than average premium increases. But they are averages of two different things. Not every insurer earns the same income nor do they pay out the same amounts. The comparison, as justification for premium increases, is ridiculous. One would need to rigorously examine the financial position of each insurer which is just not happening according to the Minister!

What a mess.