House debates

Thursday, 27 May 2021

Bills

Private Health Insurance Amendment (Income Thresholds) Bill 2021; Second Reading

12:43 pm

Photo of Matt ThistlethwaiteMatt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for the Republic) Share this | Hansard source

Under the Morrison government, the cost of many household items just keeps going up and up and up, but the one thing that isn't going up is Australian workers' incomes. Private health insurance is another of those costs that families have to bear on an annual basis that just keeps going up and up and up under this government. When you couple that with the cost of child care, which has been going up; the lid having been blown off housing affordability and house prices across the country going up; and the cost of transport, particularly all the toll roads that we have to deal with on a daily basis, going up, it makes household affordability that much more difficult.

This bill amends and implements measures announced in the budget, and what it does is adjust the formula for recommencement of indexation of the current income thresholds following the end of a pause that this bill seeks to extend for another two years. Of course, there's been a pause in the annual indexation of private health insurance income thresholds in the wake of COVID. Although we're pausing the indexation of the income thresholds, it hasn't resulted in private health insurance premiums being paused at all.

The income thresholds are indexed in accordance with the growth of full-time average weekly ordinary time earnings. The Private Health Insurance Act is the main law that sets out the requirements for private health insurance and private health insurers. That act allows for the setting of annual indexing of income thresholds. The income thresholds determine the rebate amounts that may apply for consumers with eligible PHI coverage, the rebate and the Medicare levy surcharge income thresholds and rates.

The effect of this is the continuation of the pause of the annual indexation of income thresholds for another two years and an adjustment of the formula for the recommencement of indexation after that period. The government has announced that the continuation of the pause will provide an opportunity to undertake a detailed study of the settings of the PHI rebate and the Medicare levy surcharge into the future. The reason that's happening is quite simple. It is that Australians are getting rid of their private health insurance. They're moving out of it. It's a trend that's been continuing for some years under this government, who put in place these rebate measures and the Medicare levy surcharge to encourage people into private health insurance. But the one thing they have failed at is stopping the private health insurers increasing their premiums in an unsustainable manner.

The expanded pause of indexation effectively lowers the real income thresholds at which PHI and the Medicare levy surcharge are applied, by not adjusting for increases in average earnings. In this way, it represents a lowering of the PHI rebate support and an increase in the Medicare levy surcharge rates for people who'd otherwise not be pushed into higher income thresholds. With the pause, the rebate income threshold remains at $90,000 for the base single policy and $100,000 for the base family policy. The base income threshold under which a taxpayer is not liable to pay the MLS remains at $90,000 for singles and $180,000 for couples.

Despite these changes, as I said, what we haven't seen from the insurers is a pause in the premiums. Last month average private health insurance premiums increased by 2.74 per cent, or an average of $126, for Australian families. Those opposite might not think that that's a big amount, but for a family with a couple of kids, who have just got back to a normal work pattern in the wake of COVID but are struggling to make ends meet, struggling with the exploding cost of housing throughout the country, struggling with the cost of child care, which keeps going up and up under this government, struggling with the cost of electricity, which is of course always going up, it means that there's a hell of a lot of pressure on the household budget.

This government doesn't seem to understand just how much pressure there is on household budgets in Australia at the moment. And yet there is no increase in real incomes at all under this government. In fact, they're set to fall. It is admitted in the government's own budget papers that there will be a $150 million budget deficit and $1 trillion worth of debt. What do we get for it? Not much for the average Australian household. A lot more pain—that's what you've got coming, because real incomes won't be increasing, but the costs of everyday items such as your private health insurance will be increasing.

Some funds' premiums will be rising by as much as 10 per cent over the next 12 months. That increase is more than three times as large as the CPI and twice as large as average wage increases. We know from the ACCC's review of the sector that insurers have paid out $500 million less in benefits due to COVID-19, because most of the private hospitals and indeed the public hospitals shut down for that period, when the nation was in lockdown. And there have been the ongoing shutdowns in certain states, associated with outbreaks. So those surgeries and those medical procedures didn't occur. Do you think that the private health insurers passed on those cost savings to consumers? No, they didn't. Did the government do anything to force them to pass on those cost savings? No, they didn't. Even though the Private Health Insurance Act gives the health minister the power to reject premium increases that 'would be contrary to the public interest' he's refused to do so; he's allowed them to keep increasing their prices.

During a global pandemic, and when Australian families are trying to recover from the first recession they've experienced in three decades—and the worst recession since the Great Depression—they're being forced to deal with cost pressures that keep going up and up and up and adding to pressure on household budgets, including insurance premium hikes for private health insurance. The cost of private health insurance cover under the coalition, since they came to office, has gone up 36 per cent. If you want the reason people are leaving private health insurance, that's it. It's there for you in black and white, and it's the fifth year in a row that the number of Australians covered by private health insurance has fallen, and it's fallen under a Liberal government that likes to pride itself on supporting the private sector and encouraging people into private health insurance. It was the Howard government that put these measures in place that we're debating today. Yet they've failed, and the proof is in the 36 per cent increase in premiums over the course of this government, and that it is the fifth year in a row that the number of people who have cover through private health insurance has fallen.

What's the result of this? The result is it puts more pressure on the public health system. People are saying: 'I can't afford private health insurance anymore. My wages aren't going up. Everything else is going up. We simply can't do it with the mortgage repayments we have, with the cost of child care, with the tolls that we have to pay to get around the city. We just can't do it. We're getting rid of our private health insurance, and we'll fall back on the public system. Although there's a Medicare levy surcharge, we'll have to deal with it.' And that's what they're doing. But all that means is there's more pressure on the public health system. What's the result? Elective surgery waiting lists go up. Times go up. People have to live with pain for a longer period of time. It means that there's pressure on the budgets in the public hospital system. My wife is a nurse. She works in a major public hospital in Sydney, and she tells me, quite regularly, about the staff leaving the hospital who aren't replaced. There's more and more pressure on nurses and health professionals in the public healthcare system, because the budgets are set. They're not going up. In fact, state governments are asking administrators of public hospitals to do more to find cost savings, yet more and more people are coming into the system because they've been pushed out of the private health insurance system because it's unaffordable.

So the Prime Minister and members opposite really need to explain to the Australian people why, during a global pandemic, they're allowing private health insurance companies to push up premiums by 2.74 per cent, on average, for families over the course of this year. How is that fair? Wages aren't going up; wages aren't going to go up by that much. Incomes aren't going to go up by that much. How are families meant to bear that cost? It's not an insignificant cost, either. For a family with a few kids, you're looking at at least a couple of hundred bucks a month for your private health insurance. And you might be working in a sector that's been shut down because of COVID, like the aviation sector. Anyone who works at the Kingsford-Smith Airport in the community that I represent has had their hours cut. All of the ancillary businesses that work around that and that support the industry are struggling. That applies to anyone who works in travel or tourism throughout the country. How are they meant to bear the cost of losing their work and keep their private health insurance, when the premium goes up by 2.74 per cent? They can't. And that's how they end up moving into the public system and putting more and more and more pressure on our public healthcare system.

Yesterday, we debated a bill, the effect of which was changing the taper rates for the Medicare levy kicking in and the income levels that it kicks in at. The effect of that was to take $50 million in Medicare receipts out of the system. How are you going to replace $50 million, which funds GP rebates, funds our public hospital system? How do you replace that money? There was nothing in the budget to replace that lost revenue from the changes to the income thresholds for the Medicare levy and that would have gone into supporting the public hospital system. These are the failings of the government when it comes to the budget. The failings may not be apparent right now, but I tell you what: they're going to show up in years to come. They're going to show up in enormous pressure on the health budget. They're going to show up in more and more people leaving private health insurance, putting more pressure on the hospital system and the GP network.

You can bet your life that eventually the response of this government will be the same as its response in 2014, and that is to cut services. They'll look at things like bringing back the Medicare tax that they tried to implement when Joe Hockey was the Treasurer and the cuts that they made to a number of programs throughout the country that were deeply unpopular. That will be the effect, and that is why it's important that this government, and particularly the health minister, must use the discretion that he has under the Private Health Insurance Act to make the private health insurers explain or, where they can't explain, stop these unreasonable increases in private health insurance that the average Australian family and worker simply cannot bear.

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