Sophie Scamps (Mackellar, Independent) Share this | Hansard source

I rise to speak on the Health Legislation Amendment (Improving Choice and Transparency for Private Health Consumers) Bill 2026. This bill is about clear, transparent and accurate information for people making decisions about their health. The purpose of this bill is to improve fee transparency for consumers by allowing the Department of Health, Disability and Ageing to publish information on medical fees charged by medical practitioners on the Medical Costs Finder website and to abolish product phoenixing in the private health insurance sector.

Product phoenixing is the practice of closing existing policies and replacing them with almost identical policies at a higher price. This bill would ensure that private health insurers are required to seek ministerial approval for new products and for existing products where certain changes are proposed. The bill has been welcomed by both the Australian Medical Association and Private Healthcare Australia, as it gives the consumer greater visibility of fees and out-of-pocket costs, which will help them to compare options and make informed choices about their health care.

I support these steps that improve choice and transparency for consumers. However, without a single independent steward to oversee and regulate the private health insurance sector, these gains won't stick. Private health insurance is a vital part of our health system. It works to take pressure off our public health system. The government's private hospital financial health check confirms how vital that capacity is. Private hospitals deliver around 70 per cent of elective surgeries and more than 40 per cent of all hospitalisations. Over 12 million Australians are insured for hospital treatment. Keeping these services accessible depends on funding settings that reward care, stabilise contracting and support the workforce that makes care possible.

My electorate of Mackellar has one of the highest rates of private health insurance in the country, with around 77 per cent of people aged 18 or over having private hospital cover and 83 per cent having ancillary cover. To break it down a bit further, this amounts to over 22,000 individuals and around 92,000 families with hospital cover, and over 25,000 individuals and over 98,000 families with ancillary cover.

The average age of people with private health cover on the Northern Beaches is 63. Here lies one part of the problem. More than 50 per cent of patients admitted to hospital on the Northern Beaches for surgeries are aged 65 to 84 years of age. Whilst it is a huge benefit for older members to rightly use their private cover to get elective surgery done sooner, when they make up a larger share of the pool, funds face more hospital claims. This in turn drives higher system-wide costs and cross-subsidy needs, which in turn feed into higher premiums. The consequence is that this hits the price-sensitive younger households first, risking people downgrading their policy cover or dropping out altogether, which puts more demand on the public system.

The Australian Medical Association's annualprivate health insurance report card, which was released in December last year, describes a private health insurance system that is under pressure. It describes the system as 'increasingly failing to deliver value for money for consumers' and 'no longer fit for purpose'. The AMA has called for greater whole-of-system reform to align with our changing health needs. This includes ensuring that private health insurance delivers value for consumers in terms of meeting an individual's health needs, as well as those of an ageing population with increasing chronic disease and multimorbidity.

Around 6.4 million hospitalisations per annum, or 55 per cent of the total, are due to chronic disease, which costs around $82 billion a year. So we need to ensure private health insurance aligns with this increase in chronic disease in Australia, which makes up 85 per cent of our burden of disease. If private health insurance products are designed mainly around episodic acute interventions and not around the growing burden of chronic illness and multimorbidity, then the system will increasingly fail the population it is supposed to serve. We need product settings and payment models that support continuity, rehabilitation, mental health care and multidisciplinary management, not just narrow episodes of care.

When premiums rise year after year, faster than inflation, wages, health inflation and the indexation of the Medicare Benefits Schedule, consumers notice. They notice because their direct debit gets larger, while the benefit they receive feels smaller. The AMA's Private health insurance report card 2025 put it plainly. Every year since 2008, premium growth has outstripped the consumer price index as well as health sector inflation, average weekly earnings and Medicare Benefits Schedule indexation. That is not a sustainable proposition for households already under cost-of-living pressure.

The impact of that pressure is now visible across the system. We are seeing more Australians hold health insurance products that do not give meaningful security when they actually need that care. By June 2025, there were 640,000 more policies than five years earlier, yet the number of gold-tier policies had fallen by 360,000. This shows people are downgrading to cheaper products that exclude important services. This is not consumer choice in its fullest sense; it is consumers being priced into lesser cover, and we know what that means in practice. Gold cover is the tier that guarantees no-wait access to services such as maternity, psychiatric care and many joint replacements. When people are pushed out of gold cover, it means women and families can lose confidence that private cover will deliver maternity care when they need it. It means people needing mental health care can find that the policy that they have paid for does not give timely access. It means older Australians who have paid premiums for years can discover that their cover has narrowed just as their health needs become more complex.

The AMA has warned that product phoenixing has made this especially acute in gold-tier cover, where new customers can end up paying hundreds more for effectively the same product. This is why I welcome the bill's action on product phoenixing. It closes an obvious loophole. It says that, if an insurer wants to bring out a new product or materially alter an existing one, that change should not escape proper public interest scrutiny. This bill is therefore necessary and overdue.

But banning one bad practice does not by itself fix the deeper structural weaknesses in the system. One of those deeper weaknesses is: where is the money going? Over the six years to June 2025, insurers increased benefits paid for in-hospital treatment by only 18.1 per cent. At the same time, sector profits grew by nearly 50 per cent over that period. The latest quarterly figures cited by the Australian Private Hospitals Association show the benefit payout ratio at 86.3 per cent at December 2025. That is still short of the 90 per cent level that the health minister has repeatedly said should be the benchmark the sector works towards.

Another structural problem is that there is no single fit-for-purpose independent steward responsible for the overall functioning of the private health system. We do, of course, have regulation. The Australian Prudential Regulation Authority, APRA, has an important role around licensing and supervising insurers, setting and enforcing capital solvency, governance and risk management requirements, as well as collecting and publishing industry statistics. The Private Health Insurance Ombudsman has a consumer complaints and information role. The health department administers premium approvals and policy settings. But no one body has the mandate to do a number of other things, including overseeing the interaction between insurers, hospitals and medical practitioners; setting the baseline expectations for contracting; monitoring whether products are delivering real value; or advising government on whole-of-system reform before problems become crises. The AMA has been making this point consistently and has called for an independent private health system authority to fill that gap.

The AMA has warned that selective contracting and no-gap arrangements between private health insurers and doctors may constrain patient pathways. It can affect a patient's choice of doctor and hospital, and can interfere with clinical autonomy. When there is no independent umpire setting fair rules and minimum standards, the bargaining imbalance between insurers and providers can ultimately be felt by patients. That's why an independent private health system authority is needed. It would not replace APRA's prudential role nor duplicate the ombudsman's consumer role. It would be tasked with better regulating and having appropriate oversight of the private health system, including: providing independent, evidence based advice to government; driving reforms that deliver value for customers that meet a person's health needs and the needs of an ageing population with increasing chronic disease and multimorbidity; and also conducting ongoing reviews and continual alignment of all private health system policy levers. Its role would include: overseeing contracting arrangements across insurers, hospitals and medical practitioners; recommending and setting standard terms and conditions for fair dealing and transparency; monitoring value for money and pay-out performance across the sector; and publishing system-wide indicators on affordability, coverage and access. This is the kind of stewardship a public health system that integrates private health insurers into it requires. But the authority should not stand alone. It should sit alongside concrete reforms that deal with the immediate pressures consumers and providers are facing right now.

First, there is a strong case for a legislated minimum benefit payout ratio. The federal minister for health wants to see at least 90 per cent of premiums returned to consumers as benefits. The major private hospital peak bodies, the Australian Private Hospitals Association and Catholic Health Australia, recently publicly backed that principle as part of a package to restore sustainability, arguing that returning to 90 per cent would inject around $1.2 billion a year into hospitals and health services.

Second, we need fair contracting rules. APRA and CHA have called for a mandatory code of conduct for insurer-hospital contracting, overseen by the Australian Competition and Consumer Commission, to improve transparency, consistency and fair terms. Whether that code is housed directly under the ACCC or developed in concert with the new independent authority, the principle is sound. There must be clearer rules set so that opaque contracting disputes do not keep destabilising hospitals, eroding services and limiting patient choice.

Third, transparency needs to extend beyond fee publication alone. Private Healthcare Australia has backed stronger Medical Costs Finder laws and has also argued for stronger protections against surprise billing, including clearer informed financial consent and consequences where patients are not properly informed of charges in advance. This complements the AMA's position that the public deserves the full picture of what specialists charge, what Medicare pays and what insurers contribute. Consumers need all three pieces of information together.

If health insurance is unaffordable and people leave the system, the pressure does not stay with the private market. It lands in public hospitals, in emergency departments, in elective surgery queues and, ultimately, on taxpayers. Preserving a strong private system is not about privileging one sector over another; it's about protecting the mixed model that allows our entire health system to function.

This bill deserves support. Publishing more accurate fee and rebate information on the Medical Costs Finder and closing down product phoenixing are sensible and necessary reforms. Both have been welcomed by key sector voices and both should pass. But parliament should not mistake this bill for a complete reform agenda. The evidence is clear—if we are serious about protecting patient choice, keeping private care accessible and preventing spillover into the public system, then we need the next step as well: an independent private health system authority, backed by a legislated 90 per cent minimum payout ratio; fair contracting rules; stronger surprise-billing protections; and product reform that reflects the realities of chronic disease and an ageing population.

I commend this bill to the House and I move:

That all words after "whilst" be omitted with a view to substituting the following words:

"not declining to give the bill a second reading, the House:

(1) notes that:

(a) since 2008, average private health insurance premium growth has exceeded inflation, average weekly earnings and Medicare Benefits Schedule indexation;

(b) over the six years to June 2025, insurers' benefits for in-hospital treatment rose only 18.1 per cent, while sector profits grew by nearly 50 per cent in the same period;

(c) the current benefit payout ratio is still below the Federal Health Minister's 90 per cent benchmark; and

(d) there are no standard terms and conditions for private health insurers' 'no-gap' and 'known-gap' contracts with doctors; and

(2) calls on the Government to establish an independent Private Health System Authority to better regulate, review and oversee the private health system, to ensure value for consumers and that Australians' changing health needs are met".

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