Mark Butler (Hindmarsh, Australian Labor Party, Deputy Manager of Opposition Business in the House of Representatives) Share this | Hansard source

I rise to speak on behalf of the opposition in relation to the Private Health Insurance Legislation Amendment (Age of Dependants) Bill 2021 and, in doing so, indicate that the opposition will be supporting this bill. Certainly, those on this side of the House know the scale of the impact of private health insurance cost increases under this government over the last several years. Just between 2013, when this government took office, and 2019, the average price of a family insurance policy increased by more than 30 per cent, or, on average, by more than $1,100, at a time when wage growth has been lower than at any other time on record, as measured by the ABS. This is part of a very serious squeeze on households, and the Labor Party has been loudly advocating any measure that would ease the squeeze on those households. As a result, as I indicated, we will be supporting this bill.

The bill changes the way in which family policies operate, particularly in relation to dependants, and there are two elements of the bill that I seek to address. The first is a change to the definition of dependent young adults. Currently, as members of the House will know, family policies are able to cover dependent young adults up to the age of 24 years. That is the maximum allowable age under the existing legislation. The government announced as part of their 2020 budget that they proposed to increase the maximum allowable age of dependent young adults from 'up to 24 years of age' to 'up to 31 years of age'. The young adult must still, of course, be a dependant. It doesn't cover all young adults; they must be dependent young adults. The legislation currently doesn't define 'dependant' and it is not proposed to insert a definition of dependant. This is a term that's broadly understood in the community and a term that is defined in most rules of individual private health insurance products.

This is an important measure that the Labor Party supports for two reasons. The first is that it eases the squeeze on private health insurance costs for dependent young adults in the community. This is, as I think members of the House understand, a growing cohort in the community, as a result of a number of factors in the economy. The first is the enormous increases over recent years in housing costs and the extraordinary difficulty young Australians have in breaking into that housing market. We've seen the vast increase in the number of young Australians who are not able to leave the family home at an age where, in past generations, they already would be starting to set down roots—certainly in the private rental market, and hopefully breaking into homeownership as well. Unfortunately, that is not the case for the current generation of young Australians as it traditionally had been in this country.

Also, young Australians have been disproportionately impacted by the job losses that have flowed from the recession caused by the COVID pandemic. Industries with which I'm familiar—I represented workers from the hospitality industry for many years before coming into this place, and a number of other members of this House are very familiar too—have an overrepresentation of young workers and were disproportionately impacted by this recession. So, on the one hand, young Australians are being hit by the vast increases in recent years in housing costs—in the private rental market and in the ownership market—and on the other they are disproportionately impacted by the job losses we've seen as a result of the COVID pandemic. At the moment, when a young dependent adult turns 24, even if they are still dependent they are forced by the existing legislation to take out their own policy. They often choose not to. They simply don't have the financial capacity to take out their own individual policy, which will be significantly more expensive than their share of the family policy would have been only the year before.

The second reason this is an important measure that the Labor Party supports is that, as a result of that increase in costs at a time when dependent young adults simply can't afford such an increase, those young adults become disconnected from private health insurance coverage. Obviously, that means they're not covered for an event that might happen in their 20s. Although, obviously, young people are less likely to have an adverse health event than someone of my age and above, it still does happen. As a result of the increasing costs, they might be disconnected from coverage and not covered for an event.

More structurally, though, there is a problem that's been identified by the government and long articulated by the private health insurance industry. Because these young adults become disconnected from coverage in their late 20s, they are often not covered at a point in time when the lifetime health cover arrangements kick in, which is at the time of their 30th birthday. As members of the House know, lifetime health cover is a policy that was introduced 20 years ago by the Howard government. It is a policy that has bipartisan support. It operates with a mix of sticks and carrots, might I say, to encourage Australians from the age of 31 to take up private health insurance if they have the capacity to do so.

The carrot is that there is a private health insurance rebate that covers a substantial portion of the cost of private health insurance, but there is also a stick, which adds an additional two per cent loading to the cost of an insurance product for every year that a young person remains uncovered from the age of 31. It's a two per cent penalty, if you like, or a two per cent loading, from the age of 31. It is in everyone's interests that, as far as possible, young people reaching the age of 31 are already covered by private health insurance policies. So we support the measure that the government is seeking to put in place in this bill that would have dependent young adults, those who are still financially dependent on their parents, still covered when the lifetime health cover arrangements kick in, which is on their 31st birthday.

The second element of this bill is a really important measure that I congratulate the government for implementing. It allows dependent adult children with a disability to remain covered by their family's private health insurance policy, with no age limit. Currently, as with other young dependent adults, on their 24th birthday, a dependent adult child with a disability—still living at home, probably, with their parents—would have to take out their own insurance policy. We know that adult children of that age with a disability have an even greater need for private health insurance coverage to complement the benefits of Australia's public health system than young adults without a disability. So this is a very important measure. It means that young adults with a disability who turn 24 do not have to go and seek their own individual policy, which would be more expensive than the proportionate share of the family policy—easing the squeeze for a cohort in our population that we know are already under immense financial pressure.

This bill defines an adult dependent 'person with a disability' as effectively someone who is a participant in the NDIS, the National Disability Insurance Scheme. This is, we're told by the government, a product of substantial consultation between the government, the insurance industry and disability organisations, along with the release of a consultation paper that was the subject of submissions made by organisations from the disability sector and the insurance industry. I know, because Labor has been talking to disability organisations, that there is an appetite to push for broader coverage. It's a great measure, via this bill, to cover people who are participants in the NDIS, but there are a number of young, and not-so-young, Australians who, because they have a disability, are still dependent on their family. There is a real appetite for them, even if they're not covered by the NDIS, to also seek the benefits of family policy coverage after the age of 24.

The government tells us, through the explanatory memorandum, that it has told disability organisations that the definition of an adult 'person with a disability' connected to the NDIS is only a minimum and that private health insurance companies will be able to offer policies with a broader definition of 'disability'. It's won't just be dependent upon a person's acceptance by the NDIA for participation in the NDIS. This is a really important point to make, because there has been, over the last 24 hours or so, significant discussion within this building about whether the definition of 'disability' should be broader. We encourage that conversation to continue between relevant organisations and the government as this bill moves from this chamber to the other place, but I do make the point again that this is a minimum definition. Insurance companies are able to offer policies that continue to cover dependent adult children, with a broader definition of 'disability' than just participation in the NDIS. We're told—I'm told—there are insurance companies that intend to offer products with broader coverage. I make that point.

By the time this bill reaches the other place, we look forward to hearing whether there have been any further conversations between the disability sector and the government about those arrangements. We look forward to having a mature conversation with the government about that in the event that there is any change. But we have been reassured by the fact that this bill provides only a minimum definition of 'disability'.

Overall, though, as I indicated in my opening remarks, we think this is a strong measure. I congratulate the government for making these changes and easing the squeeze for private health insurance costs, particularly for, on the one hand, young adult dependent children over the age of 24 before the lifetime health cover arrangements kick in, and also dependent adult children of any age with a disability who are within the NDIS definition or any other definition of 'disability' that the private health insurance industry decides there is a market benefit to offer.

I commend the bill and indicate that the Labor Party will support its passage.

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