Peter Dutton (Dickson, Liberal Party, Minister for Health) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill seeks to redress implementation concerns with legislation introduced by the previous government. As part of the 2012-13 Mid-Year Economic and Fiscal Outlook, the former government announced that from 1 April 2014, the government's contribution to an individual's private health insurance rebate would be capped and effectively reduced over time as a proportion of the premium.

The previous government's legislation caps the Australian government rebate by setting a base premium for every type of insurance product on the market, and then indexes the rebate payable for every type of private health insurance product subgroup by the lesser of the increase in the CPI or the increase in the commercial premium for each product subgroup.

It was the third measure introduced by the previous government to reduce rebates available to people with private health insurance, but it also introduced additional complexity.

Industry has expressed concern that the planned administration of the base premium act at a product level was unduly complicated, difficult and costly to implement and would be difficult for consumers to understand. Industry has advised that there are over 34,000 policies on the market and the burden placed on private health insurers to comply with the application of a unique rebate for each policy type is estimated to be more than $15 million in implementation costs alone.

The Private Health Insurance Legislation Amendment Bill 2013 simplifies current implementation arrangements for indexing the government's contribution to the rebate by amending the Private Health Insurance Act 2007to create a single adjustment factor under a legislative instrument. The rebate will be adjusted uniformly across all insurance policies each 1 April by a factor to be determined in accordance with the Private Health Insurance (Incentives) Rules made under section 333-20 of the Private Health Insurance Act 2007. The adjustment factor will be a ratio representing the proportion of the increase in the CPI compared to the average private health insurance premium increase. The adjustment will apply to premiums that are paid or payable in the 12 months starting on that 1 April.

This arrangement will be easier for consumers to understand and for insurers to implement.

Industry has advised that this bill will result in administrative savings of around 80 per cent below the costs to implement the previous Labor government's base premium act.

The bill is also making a minor amendment to the Private Health Insurance Act 2007 to clarify that a restricted access group can include one or more classes of people as defined within the Private Health Insurance (Registration) Rules.

Debate adjourned.