Julia Gillard (Lalor, Australian Labor Party, Shadow Minister for Health and Manager of Opposition Business in the House) Share this | Link to this | Hansard source

I rise to speak today on the Health Legislation Amendment (Private Health Insurance) Bill 2006. Mr Deputy Speaker, can I foreshadow that the opposition will have a second reading amendment and in the consideration in detail stage will be moving an amendment to the provisions of the bill, the contents of which I will deal with as I speak to it now.

This bill makes changes to the powers of the Private Health Insurance Ombudsman and also makes minor amendments with regard to the administration of the private health insurance rebate by Medicare Australia and by the Australian Taxation Office. The legislation will make changes to the powers of the Private Health Insurance Ombudsman which expand and enhance the powers of the Private Health Insurance Ombudsman so that, in addition to dealing with consumer disputes with funds, the ombudsman can now examine issues relating to the arrangements between the insurer, the provider of the service and brokers. These amendments will also allow the Private Health Insurance Ombudsman to become involved in the mediation of disputes, albeit on a voluntary basis only.

The bill will also make the necessary amendments so that the Private Health Insurance Ombudsman will be able to direct the participation by the subject of a complaint in compulsory mediation. He or she will be able to mediate between a health fund and a health care provider on his or her own initiative or at the minister’s request, including directing participation in compulsory mediation.

The Private Health Insurance Ombudsman will have the necessary powers to require the production of records not only from health funds but also from health care providers and brokers. The bill ensures that the Private Health Insurance Ombudsman, the ombudsman’s staff, external mediators and persons dealing with the Private Health Insurance Ombudsman are appropriately protected from civil and personal liability arising from the increased powers.

The Health Legislation Amendment (Private Health Insurance) Bill also makes an important amendment to the legislation as it inserts an objects clause. This objects clause is important because it ensures that the Private Health Insurance Ombudsman will have consumer protection as the focus of his or her attention even though the ombudsman’s powers are extended to examining issues relating to service providers. The last thing Labor wants to see is an ombudsman focusing on disputes such as contractual disputes between funds and providers when the ombudsman’s aim should be to focus on how these issues impact on consumers. It is not the ombudsman’s role to act as a referee on pricing and service disputes between funds and providers. This is a job for the parties and of course the Department of Health and Ageing. The government has stated that the purpose of the additional powers is to increase the effectiveness of the ombudsman in resolving complaints and contract disputes. Labor will support any measures taken to ensure that consumers are protected and well represented in the highly complex and sometimes opaque private health insurance market.

Labor does, however, have some concerns about the consultation that took place in the lead-up to this bill. The industry was directly contacted to provide its input on this extension of powers. This is to be expected, and the sector is also to be commended for broadly supporting these changes. However, direct consultations excluded consumers and consumer groups, and the minister’s request for submissions through the Private Health Insurance Circulars came only three weeks before the deadline for submissions, which coincided with the Christmas week. Mr Deputy Speaker, I am sure that, like me, you would be concerned that any request for submissions coming only three weeks before the Christmas week is likely to be viewed as a very token request for submissions. Clearly it is of concern that consumers and consumer groups have been excluded from consultation at all.

As members in this place, we would all be aware—indeed you would have to live underground not to be aware—that our constituents’ main concerns with private health insurance are its ever-increasing premiums and the problems that people have when they use their policies. In particular, people face exclusions that they did not know were applicable, and they are surprised, when they come to use their policy, that something they seek to use the policy for is not covered. And of course one of the huge bugbears for consumers in the private health insurance system is gaps. When people use their private health insurance, often having contributed to it over a lifetime, they are astonished that they are also presented with a bill for quite big dollar sums for gaps that they did not know were going to exist. Indeed, it is because of ever-increasing premiums, because of unexpected exclusions and because of the fear of gaps that some people surrender their private health insurance. We would all be aware from private health insurance statistics that, in mid age ranges, the number of people holding private health insurance is reducing. I would warrant that that is because of the pressure of increased premiums and because people are not sure about the value for money of the product, given the exclusions and the gaps.

We know that private health insurance premiums have increased a staggering 40 per cent since 2001, despite a Howard government election promise in 2001 that it would be putting downwards pressure on private health insurance premiums. So I think we can see that the promise made in 2001 was completely empty. Private health insurance premiums have escalated dramatically since. Consumers have seen the rise of exclusions on the one hand and gaps on the other, but, when it comes to a consultation process about the powers of the ombudsman to deal with disputes in the private health insurance sector, we find that the Howard government has conducted this consultation process so that consumers or their advocates were not included in the loop in any way, shape or form.

I have had cause before to raise in this place the political closeness—indeed, the interdependency—of the Howard government and the private health insurance industry. We do think that there is an unhealthy interdependency there and that the private health insurance industry exercises a lot of strategic political muscle when it comes to the Howard government. We certainly do not say that it was inappropriate for industry to be consulted on the contents of this bill; indeed, it was highly appropriate for industry to be consulted on the contents of this bill. But there is more than one party to this transaction. When you purchase private health insurance, there is the private health insurance industry but there are also the millions of private health insurance consumers around the nation, and we certainly believe that those consumers should have been included.

On the question of the affordability of private health insurance, I have said that premiums have gone up a staggering 40 per cent since 2001. I think we should just take a moment to note that that means they have been increasing at over twice and three times the rate of the consumer price index and that, in dollar terms, the staggering increase in private health insurance premiums has negated the dollar value of the Howard government’s much vaunted private health insurance rebate. It is important that, even with the rebate, we do all we can to keep private health insurance affordable and accessible. This is particularly the case for those who rely on it for access to dental care, because we know that, in this country, unless you can privately fund, or you are privately insured for, dental care, you are thrown on a public system that is in crisis. It is in crisis because of the withdrawal of the $100 million by the Howard government as one of the first acts it engaged in when it came to office.

The government abolished the Commonwealth dental scheme and took $100 million out of public dentistry. When it did that it denied any Commonwealth responsibility for dental care. This is, of course, an absurdity, because the most casual reading of the Constitution would show that the federal government does have responsibility for dental care and has specifically been given power for medical and dental services. Notwithstanding that, the Howard government ripped $100 million a year out of our dental system. Having done that, we see a crisis right around the country, despite increasing investment by state Labor governments around the country. So what is available for people interested in dental care through private health insurance, if they are able to afford it, is very important.

We know that the changes in this bill will not assist in giving the ombudsman power to deal with complaints relating to private health insurance premiums. Once again, we have seen consumers not being consulted and we have seen them in a position where they are evermore reliant on their private health insurance because of the withdrawal of appropriate funding to health services like dental care. Even though this bill contemplates an extension of the ombudsman’s powers, it will not extend the powers in a way that means the ombudsman will be able to deal with issues and complaints relating to ever-escalating private health insurance premiums.

The Department of Health and Ageing has argued that complaints about premium increases have been decreasing, but I would suggest that this is largely due to the fact that the ombudsman lacks any power to take action in this area. Obviously people soon learn that if they are complaining to an agency without power there is not much point in complaining. While the regulation of the annual premium increases is the responsibility of the Private Health Insurance Administration Council and the ultimate tick-off is by the Minister for Health and Ageing, there is no scope for the ombudsman to examine, from a consumer’s perspective, the reasonableness of premium increases or the variability from state to state and between funds within states. That is why, when we reach the consideration in detail stage of this debate—which will obviously be on another occasion when the parliament sits—I will be moving an amendment which builds on the other changes in this bill and which will relate to the Private Health Insurance Ombudsman’s ability to make recommendations to the minister and the department. The amendments I will propose will extend the ombudsman’s ability to make recommendations to the minister or the department regarding disputes about the conduct of brokers and providers, in addition to funds, as is already the case.

Once again, Labor is supportive of general extensions to the ombudsman’s powers, but we believe that the ombudsman should be given further powers to investigate premium increases—and when we deal with the consideration in detail stage we will be pursuing that matter further. In order to give the ombudsman such power in looking at and investigating premium increases, we would see an extension of powers within this bill, connecting it to the powers in the Trade Practices Act so that the Private Health Insurance Ombudsman could make recommendations to the minister, which would enable the minister for health to direct the ACCC to monitor the private health insurance industry’s pricing. We are particularly concerned that there be extra powers in relation to monitoring on premium increases, given that we are in the year in which the Howard government intends to sell Medibank Private.

Whilst the Howard government has maintained that the sale of Medibank Private will increase competition in the private health insurance sector, this claim does not stand up to the most cursory examination. Whilst the Howard government has not come clean with this parliament, with holders of Medibank Private policies or with Australians generally—who all have a joint interest in the future of Medibank Private—as we understand it, the most likely mechanism for the sale of Medibank Private is that it will be a trade sale, not a public float. Indeed, the Howard government has not ruled out breaking Medibank Private up into pieces and selling them separately.

Either of these sale strategies is a recipe for further market consolidation in the private health insurance sector, because it is far more likely than not that the purchaser of Medibank Private, either in whole or in sections, will be a current private health insurer. If that were to happen, we believe we would see dangerous levels of consolidation in the private health insurance market, particularly in some states of Australia, and you do not need to have a master’s degree in economics to know that if there are fewer players in the marketplace there will be less competition and, therefore, less rigour in pricing and we are much more likely to see more extensive private health insurance premium increases than we otherwise would have.

I want to give some examples to the House of the importance of the Private Health Insurance Ombudsman and, consequently, the importance of some of the issues before the House today that we are dealing with. These examples have been brought to the attention of my office by the persons concerned. One dealt with the question of insulin pumps. A family had a policy that covered an insulin pump for a child who had diabetes. The private health insurance fund refused to cover the cost of this pump, even though it was part of the policy. The family lobbied the fund but without success. The family went to the Private Health Insurance Ombudsman, who then found that the family’s policy did cover the cost of the pump and that the fund was trying to exploit a loophole regarding supply of a product out of a hospital setting. That was a happy example of the use of the Private Health Insurance Ombudsman’s powers.

However, it is a matter of regret that I have to report to the House that we do not see happy results on all occasions. Indeed, we were not able to get a happy result in relation to dialysis services. The person involved, who obviously needed dialysis, was seeking private health insurance support for their dialysis, but we were not able to achieve a result where their private health insurance would lend support to their dialysis.

These examples are offered to reinforce the importance of the work of the ombudsman. Consequently, Labor supports the additional increase in powers. It may have been that, had the Howard government properly consulted with consumers and consumer groups, this bill would have contained an even further extension of powers. Certainly, we believe that those powers should extend to having the rollover of private health insurance premium increases that I have outlined—and we will be pursuing that at the appropriate time.

When I conclude my speech, I will move a second reading amendment that will comprehend two issues of concern to the Australian community and that relate to the content of this bill. The first is the sale of Medibank Private. That is a huge structural change to the private health insurance market, which we believe will lessen competition and, in particular, cause increased escalation in premiums and the second reading amendment will deal with that issue. In addition, the second reading amendment will deal with the critical structural weaknesses in Australia’s health sector.

Mr Deputy Speaker, you would be aware that we cannot have a healthy health system overall if all of its parts do not work properly. In this country we have historically had and will continue to have a mixed system, which includes a public sector. The majority of Australians rely on the public sector for their entire health care, but all Australians rely on it for some of their health care. In particular, Australians rely on the public health system for treatment in truly urgent situations, in true emergencies. In addition, all Australians, irrespective of their private health insurance status, rely on the public sector for the most high-end and complex care. As I think we all know intuitively, if you had an incredibly complex life-threatening health condition and needed a frontier surgical intervention, it could be done only in a tertiary public-sector teaching hospital; it could not be done in any other health setting in Australia. So we all have a shared interest in the future of the public hospital system. Many Australians are also interested in the private hospital system because they either self-fund or insure against private hospital costs.

The Howard government, when you review its health performance, is failing across both of these sectors. The failures in the private health insurance sector I have outlined, with escalating premiums and increasing gaps and exclusions. The failures in the public health sector are well known. Firstly, we have a workforce crisis. Clearly, our public health system—indeed, our private health system—cannot work, unless we have enough doctors, nurses, allied health professionals and, indeed, dentists to provide the care and right across this country we do not have sufficient numbers of those people. Indeed, in recent days the minister for health in question time has boasted about how many doctors and nurses we are importing. He is not wearing our undersupply of Australian doctors and nurses as a badge of shame; he seems to think it is a badge of honour that the only way the Howard government can get sufficient doctors and nurses in this country is to import them. Labor thinks there is a better way, which is that we train enough doctors and nurses to meet Australia’s health care needs.

Secondly, Mr Speaker, as you would be aware, when it comes to our health system, the Howard government has failed to deal with the important issue of Commonwealth-state reform. Billions of dollars are wasted as a result of the gaps, holes, duplication costs and blame shifting between our federal system and our state systems. The states have indicated their preparedness to participate in major health reform but, unfortunately, the Howard government is not prepared to work with them as a true partner in health reform and to generate a more efficient health system overall.

Thirdly, we have a systemic underfunding of our health system. Mr Speaker, you would be aware that, on the last occasion the Commonwealth and the states negotiated the Australian health care agreements, the Howard government took $1 billion off the table—and $1 billion shows when it comes to the operation of the health system. In view of the time and to suit the convenience of the House, at this stage I will move the second reading amendment standing in my name and otherwise reserve my rights. I move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House is of the view that the minister stands condemned for failing to:

(1)

address the concerns of members of Medibank Private and proceeding with the sale of Medibank Private even though the majority of Australians are opposed to the sale.

(2)

address critical structural weaknesses in the health sector such as workforce shortages and the rising costs of health.”

Debate interrupted.