Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

It's a pleasure to rise to address the Private Health Insurance Legislation Amendment Bill 2018. Liberals believe in a sustainable health system that delivers quality, equity in access and choice. The very foundations of a health system are that people are free to choose how they seek their care and get their assistance. Think about the millions of Australians in this country right now who face impairment or health challenges and want to decide how to seek care. It is important for them to be able to have choice. Particularly with an ageing population and those wanting to make sure that they can guarantee themselves care at a time of security in their life, the importance of freedom to choose health care is now more important than ever. But freedom to choose health care is based on the system having equity in access and being, of course, critically affordable for all Australians. That's why this legislation and the agenda of the Turnbull coalition government is to make sure that private health insurance is affordable and accessible for those people who seek the freedom to move beyond the public system.

With this bill the government is preparing our health system for the 21st century and beyond. By understanding the drivers of health expenditure we can prepare the private health sector for the times and what we need for the future. Whether it's private health insurance, public hospital funding or primary care, these issues must be debated in the context of Australia's rapidly expanding health sector. One of the critical things that this government is doing, despite the deception of those from the opposition, is making sure that there is record funding for public hospitals. There is also important funding for primary care. But we also see the public system working hand in hand with a robust, strong and competitive private health system.

Health expenditure exceeded 10 per cent of gross domestic product for the first time in 2015-16. Private health insurance expenditure grew by 4.6 per cent in real terms from 2014-15 to 2015-16. Projections by health economist John Goss show that health as a percentage of gross domestic product will increase by roughly one per cent every 10 years, so, in 2032-33 for every $100 spent in the economy $12 will be spent on healthcare service provision. Of course, a lot of this correlates directly to the drive and need associated with an ageing population and the expansion and use of technology to assist people and manage chronic conditions that might once have been fatal.

We need to reform the health system now—and this piece of legislation is one prong in that process of reform—so that Australians can get bang for their health buck and continue to live long, healthy lives into the future. Any discussion about reform needs to have this in mind and also examine what is driving the growth in expenditure and demand. Between 2004 and 2013 the average annual growth of government funded admitted patient expenditure was 7.8 per cent. Hospitals were responsible for the lion's share of this growth, rising by $8 billion from 2002 to 2013.

Analysis of these growing costs shows that there are multiple factors driving the increase in hospital demand. There is excess health price inflation, particularly from the cost of prostheses, which has been an issue that has been addressed in part by this government. Of course, population growth has been critical for part of the rise in healthcare expenses. Ageing is critical because people are living longer, healthier, happier lives. They are living with chronic conditions that once would have been fatal. Of course, they are getting higher levels of care, particularly at the latter stages of life, including palliative care. There is the growth in the real volume of services per person. What that means is that demand for medical services is rapidly rising. This measure accounts for over half the increase in healthcare expenditure.

Medical advances mean that we can do more to help more people. That's always welcome news, given the rates of chronic diseases, such as diabetes and kidney and urinary disease, have increased significantly. The private health insurance sector has the potential to better meet these demands and improve satisfaction among hospital users. This is the core mission of this bill. Some 13.5 million Australians rely on private health insurance when they need it—and I am one of them and the Goldstein electorate is proud to have a very high rate of private health insurance policy take-up, because people in Goldstein value freedom in choice.

Private health cover accounts for two out of every three non-emergency procedures. And it's not just for the wealthy: one in four policyholders have an annual income of less than $30,000, and almost half make $50,000 or less. These reforms are about getting those people, low- and middle-income earners, a better deal so they can have choice and not be compelled only to the system that our political opponents demand be provided for them. And it's about modernising our healthcare system so that it can meet the needs of today and tomorrow.

This bill addresses the high out-of-pocket costs for consumers as well as a lack of transparency and sustainability in the sector. Australians spend more on out-of-pocket costs than the OECD average. Unexpected out-of-pocket costs are a major issue for private health insurance users. While 86 per cent of services are covered under the no-or-known-gap arrangements, the remaining 14 per cent of services incur out-of-pocket covers not covered by insurance. Procedures in hospitals include bills from multiple sources: of course, the surgeon, the assistant surgeon and the anaesthetist, among many others. For instance, you might have been booked in for spinal surgery and thought you were fully covered, but end up facing large, unexpected out-of-pocket hospital expenses. One in seven private patients experience these costs, and they are often significant bills. The average out-of-pocket cost for spinal surgery is $2,250.

Transparency regarding these charges is, of course, desperately needed. The government has established an expert committee to work with consumers, the medical sector and private health insurers on the best method of simplifying out-of-pocket expenses, and these recommendations will resolutely benefit consumers. Furthering our transparency and accountability objective, the bill also strengthens the power of the Private Health Insurance Ombudsman.

Increasing costs of medical prosthesis have put upward pressure on premiums for years. These reforms will deliver immediate relief for private health insurers by reducing benefits paid for medical devices on the prosthesis list. The benefit will contribute to the lowest premium rise consumers have faced in 17 years. I'll repeat that: the benefits from this legislation will contribute to the lowest premium rise consumers have faced in 17 years.

Despite this, health insurance membership is falling, particularly among young Australians, and we must tackle that challenge now. To have a sustainable private health insurance system you need people participating at all stages of life. We owe it to younger Australians to fix this problem, especially given the importance and the long-term sustainability of the health system. Healthcare costs most not become another hindrance preventing young people from getting ahead. So if you're 18- to 29-years-old, this bill allows insurers to offer you products with discounted premiums of up to 10 per cent. It also allows insurers to offer lower premiums to everybody, offset by policies with higher excess payments. On top of the $92.4 million investment in frontline mental health services in this year's budget, this bill continues to address the mental health concerns—

(Quorum formed) It's always good to have a bigger audience. Let's get back to the point—that is, we're passing this piece of legislation, and it is a good bill. On top of the $92.4 million investment in frontline mental health services delivered in this year's budget, this bill continues to address the mental health burden faced by many Australians. Mental disorders are one of the highest drivers of increased volume of services per person between 2004 and 2013. Once implemented, these changes will allow people to upgrade their cover and access mental health services without a waiting period on a one-off basis. This contributes more value to the health insurer products, particularly for young Australians, who are disproportionately affected by mental illness.

Value is also added by allowing insurers to offer travel and accommodation benefits for people in rural and regional areas. Access to private hospitals is limited in rural, regional and remote areas. Given one of the largest barriers to ongoing continuity of care is the tyranny of distance across the great brown land we call home, these very welcome reforms reflect the Turnbull government's understanding of the challenges facing all Australians. Currently many insurance policies are hard to disentangle. There are inconsistencies in treatment definitions and coverage levels, making them difficult to compare. This bill requires insurers to categorise products as gold, silver bronze or basic and use standardised definitions for treatments to make clear what is and isn't covered in their policies. The PrivateHealth.gov.au website will also be upgraded to make it easier to compare insurance policy products. This bill represents a series of considered evidence based changes to enhance patient satisfaction. It helps all Australians, but particularly young Australians, with their health costs, empowers consumers through policy transparency and sets up the private health sector for ongoing, enduring and meaningful reform so the health system can deliver for the Australians it was designed to serve.

Ms Catherine King (Ballarat, Australian Labor Party, Shadow Minister for Health and Medicare) Share this | Link to this | Hansard source

I too rise to speak on the Private Health Insurance Legislation Amendment Bill 2018 before the House, which has been called on much earlier than it was on the Notice Paper, hence my contribution is a little later than anticipated. Australia is in the midst of a private health insurance crisis. That word gets thrown around a lot in this place, but I don't use it lightly in this instance. There is no other way to put it. We are facing a private health insurance crisis. Faced with relentless price rises, double and sometimes triple the general inflation rate, many Australians simply cannot keep up with the cost of private health insurance any longer. Under the Liberals, premiums have increased by 27 per cent since 2014, costing families on average $1,000 more a year. This year alone Australians will have to find $1 billion extra out of their own pockets for the same level of private health insurance cover. Health insurance is now a leading cost-of-living concern for many families, right up there with energy bills and child care. Every year, when they get that letter from the health fund telling them how much more they are required to pay, for no extra benefits or services, families ask the question: can we really afford to keep paying for this? Is there anything else we can cut from our budget to keep our private health insurance? Maybe they'll try to make savings at the grocery store or skip the summer trip down to the coast, if they're lucky to be able to afford that. But 12 months later they'll be forced to have exactly the same conversation and make the same sort of choices, and before too long there is nothing else in their budgets to cut.

At a time when wages aren't rising, meaning household budgets aren't getting any bigger, something has to give. Australians aren't just paying a lot more for their health insurance policies; they're also getting a lot less bang for their buck. Ten years ago only 6.6 per cent of health insurance policies contained exclusions. Now, that is at 40 per cent. Under this government, the number of private health insurance policies with an exclusion has soared to more than two million, an increase of 65 per cent since 2014. It's no wonder that, eventually, many families decide to try to live without their health insurance. Tens of thousands of people have ditched their hospital cover in recent years. The latest official figures show that the number of people with hospital cover as a proportion of the population continues to decline—down another 0.1 per cent in just three months, to 45.5 per cent. It is at its lowest level since 2011.

If we don't act now, this trend will only accelerate. As we know, if enough people ditch their cover, it could put the viability of the whole industry at risk. As the AMA's former president, Dr Michael Gannon, said earlier this month, the industry is fast approaching a tipping point. In fact, this is about more than just the private health insurance industry; it's about our health system as a whole. As the AMA's latest private health insurance report card stated:

Private health insurance premiums continue to rise year on year—far beyond the consumer price and wage price indices. If affordability is not addressed, membership rates will continue to fall, threatening the viability of the entire health system.

Last year, the Member's Health Fund, then called hirmaa, used similar language when it warned the Senate Community Affairs Committee about an imminent 'death spiral' in private health insurance. It told the committee:

If younger people continue to leave the system, private health insurance will become more expensive, thus exacerbating affordability further and potentially driving even more people out. This potential death spiral will drive many people into the public health system and onto already overstretched public hospital waiting lists.

We agree. An industry collapse would be in no-one's interest and will have significant knock-on effects for our public health system.

We believe private health insurance plays an important role in Australia's world-class health system. Contrary to the scaremongering of the government, we're not looking to dismantle it. Labor is not considering any changes to the private health insurance rebate, other than those we have already announced. We want to maintain private health insurance coverage and the unique balance between our public and private systems. But there is no doubt that meaningful intervention is required. In contrast to Labor's plan, which I'll come to later, the package announced by the minister in October was not meaningful intervention. In fact, it was thoroughly underwhelming. After two years of talking, the best the government could come up with was a range of mostly minor changes. They're tinkering at the edges. But perhaps that's not surprising given how closely the government has collaborated with the private health insurers in devising this package. The fact the big insurers welcome this package with open arms tells you everything you need to know. They know that under this government they themselves won't face any major changes. They'll get everything they asked for and their profits will be totally untouched.

Turning to the details, the principal bill in the package is the Private Health Legislation Amendment Bill 2018. This makes eight changes, four of which I want to flag that we have some concerns about. First, the bills allow insurers to offer maximum excesses of $750 for singles and $1,500 for families. This is up from $500 and $1,000 presently. The government is trading higher excesses for lower premiums, but we're concerned that in the short term consumers will opt for higher excesses that they will not be able to afford to pay when they need care, forcing them into the public system and further eroding the value of private health insurance. We know that many consumers are doing that now: not being able to pay the excesses, they are not using their private health insurance at all and opting into the public system.

The excesses proposed by the government, of $750 and $1,500, also seem to be higher than the excesses that go with other types of insurance products—house or motor car insurance, for example. They appear to be at the very high end. The impact of this measure, we believe, needs to be examined more thoroughly as part of a Senate inquiry, and we will be referring the bill to that.

The bill also allows insurers to offer age based discounts to young people, requiring amendments to the Age Discrimination Act. Insurers will be able to discount hospital-cover premiums by two per cent for each year a person is aged under 30, for a maximum of 10 per cent. Any discounts can be maintained until a person turns 40, when they will be phased out by two per cent a year. Labor supports the idea of encouraging more young people to take up private health insurance, but we fear the government's plan will offer an insufficient incentive for individuals to take out insurance but prove expensive for insurers, possibly increasing premiums to other members. Insurers estimate they will need tens of thousands of new young members in order to avoid a premium increase for older policyholders. But, under these changes, a young person signing up to an average $1,800 policy will save only around 70c a week, not even enough to buy a coffee a month—hardly an irresistible incentive.

This change also undermines the important principle of community rating, under which policyholders are supposed to pay the same premium for each product, regardless of their age, their health status or other characteristics. As with so many things the government does, this change hints at an Americanised model of health care that would not be welcome here in Australia. So this, too, must be part of any Senate inquiry.

The bills also allow insurers to terminate products and transfer all people covered by those products onto new policies. At present, they can only close products to new policyholders. The government tells us that insurers will have to inform policyholders of any changes and that customer entitlements will not be affected, but the government has conceded that this may limit choice in access to health services for people who hold a terminating product and do not wish to transfer to a new product. The government has released disturbingly little detail about how this change will work in practice, and we are yet to see the regulations from the government as to how this will be done, which is why this, too, needs to be a key focus of any Senate inquiry.

The government claims that, of the 75,000 products, there is a smaller number that have only one or two members and that, in order to introduce its new categories of gold, silver, bronze and basic, some of these products may not comply. My concern is around the rights of consumers to be offered an equivalent product at the same cost to their existing product, and what value they will be offered. It is unclear that putting this power into the hands of insurers will actually benefit consumers.

Finally, these bills respond to recent revelations that insurers continue to offer products with benefit limitation periods, notwithstanding the efforts to end them in the Private Health Insurance Act 2007. These benefit limitation periods restrict benefits to minimum levels for the first 12, 24 or 36 months of a policy before allowing the full benefits that would otherwise be paid under the policy. The bill will clarify that policies with these limitation periods are not compliant PHI products for the purpose of the private health insurance rebate, Medicare levy surcharge or lifetime health cover. It will also protect consumers who have unknowingly held non-compliant policies, by ensuring that they do not need to repay the rebate and are not retrospectively liable for tax penalties. These limitation periods are another example of exploitative behaviour by the private health insurance industry. This loophole is an important one to close, but it did seem strange that people had to find out about their potential tax liability from the front page of a newspaper, not from the government or directly from insurers. Again, I would be concerned for policyholders who have taken out these policies; they should be offered new policies that continue to offer them value.

There are other measures here that the opposition has welcomed. We've welcomed the elements of the bill that strengthen the powers of the Private Health Insurance Ombudsman, allowing it to conduct inspections and audits at the premises of health insurers and brokers. We also welcome changes that allow insurers to cover travel and accommodation costs, and to cover hospital treatment products to help people in rural and remote Australia access care. Previously, travel and accommodation have only been covered under general treatment products or extras.

The bills also replace the current standard information statement with a new private health information statement. The new statement will be in a more flexible form than the current mail-out, allowing data on private health insurance products to be accessed more easily, including through sortable websites. That, again, is a welcome change. The bill also reassigns responsibility for second-tier default benefit arrangements from an industry committee to the Minister for Health. These arrangements ensure that hospitals—mostly small rural and regional hospitals that do not have contracts with private health insurers—are paid no less than 85 per cent of average prices. There is a minor change—although, again, it is a little unclear why the minister wants to assume responsibility. I would like to ask the minister, in his response and summation, to indicate whether the government is in fact signalling a future change of second-tier benefits. It's something that would have a significant consequence for small rural hospitals, but it is something that the private health insurance industry has been significantly asking for.

The government package also includes a number of changes not reflected in this bill, most of which Labor supports. These include, as I said, the new gold, silver and bronze categories that aim to make it easier for people to select and understand their policies and, in particular, to make it clear what is and what isn't covered by these policies. While we support this change in principle, it has been some time since it's been announced and we are yet to see the details. I note the government has now ditched its promise, its policy, to abolish entirely so-called junk policies.

These bills also include upgrading the privatehealth.gov.au website to make it easier to compare insurance products. For anyone listening to this debate, this is the government-based website: it does not accept fees; it does not have products that are not included. Every single insurer and every single product is included on that website. Making that more usable for consumers is something very important for the government to do, so promoting it far more than some of the commercially-based websites that only have products where there is a fee or an arrangement with the private health insurer and not all products are listed.

We also support increasing the Private Health Insurance Ombudsman's resources to ensure consumer complaints are dealt with more quickly. We also support requiring insurers to allow people with hospital insurance that does not offer full cover of mental health treatment to upgrade their cover and access mental health services without a waiting period on a once-off basis. There is much more to do to ensure that mental health services are more broadly covered under private health insurance, but this is a start.

Preventing insurers from offering benefits for a range of natural therapies is also something that we have supported and we are very pleased that government has now, after some initial reluctance, actually agreed with Labor that not offering the rebate, which is Labor's policy—the government is saying that policies can't actually have these products in them. We'll see how that works with the private health insurers, but that's what they're suggesting. I note that the government has included 16 therapies, some of which the NHMRC has found there is some evidence for, and yoga is one of those that I particularly highlight.

All of those are fine initiatives, and supported by Labor, but, ultimately, we do not believe that the government's package will deliver significant savings to Australian consumers. That's not just us saying it; that is the AMA. Even some of the health funds themselves have said the same thing. Labor, on the other hand, actually does have a plan to deal with soaring costs. We will cap private health insurance premiums at two per cent for two years, effectively tying them to general inflation. We would deliver real relief to 13 million Australian consumers struggling with the cost of living.

This unprecedented policy will save an average of $340 for Australian families. We think that it is only fair. We want to shift the balance away from the interests of the highly profitable private health insurers and back to ordinary consumers. This is a policy that would deliver the smallest price rise in decades. But, more than that, our plan will deliver much-needed certainty. Australians could plan their household budgets around these more modest increases. No more February surprises when the insurers say, 'Your premiums will rise by four, five or six per cent on 1 April.' People would be able to calculate well ahead of time exactly how much their premiums would increase by. We think that the two-year cap will be a very important circuit-breaker in the private health insurance affordability crisis.

We fully accept that this policy is no silver bullet. It is a short-term measure designed to give Australians immediate relief, while we do the hard work of finding some long-term solutions. That's why we didn't announce our premium cap in isolation. We announced it alongside a sweeping Productivity Commission review of the entire private health insurance industry. We're working on the terms of reference of the review, which will begin as soon as possible after a Labor government's election. We're happy to involve the industry and other stakeholders in the drafting of those terms of reference. But, make no mistake, it will be a major root-and-branch review of private health insurance.

The reality is that under recent reviews, including by the government, they have barely scratched the surface of this increasingly complex system. In contrast, the last major review, conducted by the then Industry Commission, almost 20 years ago, led to the modern private health insurance system. Within a few short years of that review, we saw the introduction of important measures like the private health insurance rebate and the Lifetime Health Cover loading. This new review will give us ideas on how to bring down costs and improve quality and value over the longer term. Importantly, the review will actually go beyond the private health insurance industry and consider the whole private health system. We envisage that the commission will consider issues including the underlying cost drivers that insurers face, the range of carrots and sticks that encourage insurance coverage, and the balance between the private system and Medicare—Australia's universal, public health insurance system.

Labor has also launched a national survey to give every Australian the opportunity to have their say on this issue. The People Not Profits survey is the first stage of Labor's consultation process on private health insurance costs. It is fair to say that big insurers don't like one part of our policy. That's to be expected. We are, after all, proposing that they limit their revenue for two years in order to deliver relief for their consumers. For some funds, it will mean lower margins. For others, it may affect capital stock that is held above and beyond prudential requirements. But let's put that doom-and-gloom claim into perspective. As the Public Health Association of Australia said: scare tactics by the industry should surprise absolutely no-one. Those tactics should be rejected out of hand. The focus of this industry, as the PHAA has said, is on profits and return to shareholders rather than the health of all Australians. The Consumers Health Forum, the Australian Nursing and Midwifery Federation, and the Australian Healthcare and Hospitals Association have also welcomed our policies in no uncertain terms. Our plan has been welcomed, too, by Choice, which says that our review will 'apply more scrutiny' to what is a 'highly subsidised and highly profitable industry'—and highly profitable these insurers are.

The latest official data from the Australian Prudential Regulation Authority show insurers profits are up yet again to $1.38 billion in the 12 months to March. That is up from $1.35 billion in the previous period. What is even more instructive is that they are raising $3.7 billion more in revenue than they are actually paying out in benefits to consumers. Of the $23.8 billion they raised from private health insurance premiums, they spent $20.1 billion on the medical needs of their customers. Premiums rose around four per cent while total benefits increased by only three per cent, increasing the insurers' gross margin from 13.6 per cent to 14.4 per cent. It means that each of the country's 13 million private health insurers' customers spent around $285 last year propping up the insurers' bottom lines rather than for hospitals, nurses, doctors and medicines. This is an industry that gets $6 billion in taxpayer subsidies every year. Australians are entitled to demand a much better deal than this. As respected economics commentator Michael Pascoe wrote in recent weeks:

This is an industry that enjoys the federal government acting as its enforcer, pushing customers through its doors, using the cattle prod of tax penalties. It then blows 14.4 per cent of the money customers pay on things other than health care.

These latest APRA figures show why Labor's proposed intervention is not only justified but necessary. It's also important to note that, while insurer profits are up, complaints are also soaring. In March we saw complaints to the Private Health Insurance Ombudsman had risen by 30 per cent. The bigger insurers were, as always, proportionally overrepresented in these complaints. This shows that consumers are far from happy with the services provided by their insurers.

The latest Roy Morgan private health insurance net trust score report has found Australians now rate the private health insurance industry at the same level as gambling and real estate. Bupa rated particularly poorly in this survey. That surely wasn't helped by Bupa's decision to downgrade 7,000 policies and to restrict gap cover—that's a third of Bupa's Australian customers who were told their cover for a range of procedures would change from a minimal benefit to a total exclusion. Under the changes as they were first envisaged, patients would only qualify for gap cover if treated in Bupa-approved facilities. The AMA described these changes as a move towards US-style managed care. So we are pleased that the minister subsequently ordered the Private Health Insurance Ombudsman to examine the legality of these changes. But it shows, once again, the big private health insurers are putting profits before patients.

In talking about the profits of the big insurers, I also want to make this point. Labor understands there are effectively two private health insurance industries in this country. One is dominated by large for-profits—three big companies in particular. The other is made up of two dozen smaller funds that are not-for-profit, member owned and community based. These funds return a greater share of their premium revenue to policyholders. They have lower complaints, higher retention and higher surveyed satisfaction. These funds are growing even while the industry itself is shrinking. Among those rising number of complaints I mentioned, Member's Health Fund Alliance insurers were on the whole underrepresented. These smaller funds are critical to competition and choice in the private health insurance market, and these are the funds we want to continue to encourage. That's why we're committed to working with these funds to manage the implementation of our two per cent cap.

The government's health insurance reforms, which are largely designed by the industry itself and still resulted in another double-inflation price rise earlier this year, will not deliver the sort of relief that Labor's plan will. Having said all of that, we believe Australians need and deserve every bit of price relief that they can get. That's why we will not oppose these bills in the House of Representatives. But, as I have made clear, we want a full Senate inquiry before we agree to support their final passage through the parliament. We hope the Senate inquiry will come up with ways to improve what are at the moment inadequate bills. The government trumpeted this year's four per cent premium price rise as a big win because it was lower than it had been in previous years. It is as if the Australian people should thank the government or the insurers for taking only an extra $200 out of their pocket. These are people struggling with the costs of living; these are people already making sacrifices, already making hard choices. I talked about that at the start of this speech. Are they supposed to be grateful somehow for this price rise that is double the inflation rate? It shows how out of touch the government is.

It's clear that under the government private health insurance isn't about giving Australians choice and control over their health care. It's about giving big business another way to profit off ordinary Australians. Labor will shift the balance away from company executives and back to ordinary consumers. Therefore, I move the second reading amendment which has been circulated in my name:

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 expresses its concern that this bill may allow insurers to cancel cover unilaterally, and that higher excesses may make it even harder for Australians to afford care”.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

I second the amendment and reserve my right to speak.

Ian Goodenough (Moore, Liberal Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this, the honourable member for Ballarat has moved as an amendment that all words after 'that' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Private Health Insurance Legislation Amendment Bill 2018.

Australia's healthcare system is a unique and effective balance of the public and private systems. A report last year by the New York based The Commonwealth Fund found that our system was the second-best in the world and delivered both the best administrative efficiency and best health outcomes. Its performance is built on combining the universal coverage of Medicare with a genuinely robust private health system. By properly supporting, integrating and incentivising Australians into private health cover we reduce demand on our universal public system and avoid the worst excesses of cost and waiting times faced elsewhere.

The importance of the private health system in Australia is hard to overstate. In 2017, private health insurance paid for 11.9 million days of treatment in hospitals. That's $14.8 billion worth of treatment paid for by the private sector and by Australians who are better able to afford it. It's $14.8 billion worth of government revenue that can best be spent, instead, on supporting our most vulnerable. Private health insurance pays for almost two-thirds of non-emergency surgery, 70 per cent of joint replacements and 88 per cent of retinal procedures.

Private health does not just improve lives, though, it saves them, paying for 60 per cent of chemotherapy treatment. Of particular interest to me, and I know to the Minister for Health, private health also funds 90 per cent of day admissions for mental health and 50 per cent of all mental health admissions in total. Without private health insurance, there would have been an additional 4.6 million episodes of hospital treatment for our governments to pay for in 2017 alone. That's 4.6 million reasons every year to get the policy settings right on private health.

Unfortunately, the proportion of people choosing to take out private health care is falling. Since 2014, the percentage of Australians with hospital cover fell by more than one percentage point from 47.2 per cent to 46.1 per cent. Coverage has in fact fallen in nine consecutive quarters. Very few indicators in public life show such a consistent performance, and this is a trend that is imperative we reverse. Unfortunately, despite the lifetime health cover loading, some of the largest declines have been among the 20 to 24 and 25 to 29 age groups. The system relies on these younger participants, who don't need to use the health services as frequently, to help pay for the higher risk, often older participants.

On its own, of course, this will increase costs to the taxpayer by requiring ever more treatments to be undertaken in the public system. However, without action to check this decline we're also in real danger of reaching a point of no return. As more people drop out, the premium costs for those remaining in schemes will increase faster and drive more people toward cancelling their insurance. Eventually, without action, the system would become unable to sustain itself.

Declines this serious require a substantial policy response. The last time the nation saw a decline in private health coverage this large, under the Hawke and Keating Labor governments, the newly elected Howard government responded immediately by introducing three groundbreaking reforms, which are still cornerstones of our current healthcare system: the Medicare levy surcharge, the 30-per-cent premium rebate and lifetime health cover. This swift, comprehensive and decisive action was what was required, and it is what the coalition delivered. In just four years, coverage rose from 30.5 per cent to more than 45 per cent. Though we are not yet at a rate of decline which calls for such radical steps, we do need comprehensive reform to reverse the trend and prevent increasing pressure on the public health system.

In 2015-16 we held an extensive consultation to ascertain what needed to be done: 40,000 online consumer survey responses, roundtable discussions with more than 100 stakeholder organisations and a host of community consultations showed that we need to improve value for money, improve transparency and increase the efficiency of competition. That is exactly what the government's wide-ranging reforms, its package of reforms announced in October 2017 and encapsulated in part in these bills, will do. The bills before us will improve value for money both by reducing costs for consumers and by improving the quality of services which can be offered by private insurers.

In terms of reducing costs, the bills will allow private insurers to offer lower cost premiums to those younger consumers who are least likely to need treatment. In particular, it will allow insurers to offer discounts on standard premiums for customers who are aged 18 to 29, including discounts of up to 10 per cent for under 25s. These discounts will then be ongoing for those consumers, beginning phase out from the age of 41. Though the existing measures, which prohibit the modification of premiums based on age, were well-intentioned, they are now proving to be a critical barrier to young people taking up much-needed policies. The time has come to allow a degree of flexibility.

The bills will also reduce costs for consumers by increasing the maximum excess levels that are allowed to be offered for insurance products which qualify for the Medicare levy surcharge exemption. Many consumers, especially those who are younger and less frequent users of healthcare services, want health insurance but find the premiums prohibitive, given the diminished likelihood that they'll frequently need to use the cover provided. Many in this group would be willing to pay a larger excess on those occasions if it meant that they would afford their monthly premiums. These bills give them that option, increasing take-up and reducing costs for everyone.

The bills also improve value for money by improving the range of services that can be provided. Although the Sunshine Coast is now very well served for healthcare services, that was not always the case. For decades, people living on the coast had to travel to Brisbane for a wide variety of procedures and treatments. In many regional areas, that is still necessary. These bills increase value for money by allowing insurers to offer these regional consumers travel and accommodation benefits as part of their hospital cover.

The bills before us will increase transparency by prohibiting the use of benefit limitation periods, which consumers have told us are confusing. They'll also strengthen the powers of the Private Health Insurance Ombudsman, allowing it to conduct inspections and audits at the premises of health insurers in order to follow-up complaints or ensure compliance. Finally, the bills will improve the information available to consumers by introducing private health insurance statements in place of the existing standard information statement. These new statements will give more useful information and will be available to consumers in a wider range of formats.

Finally, the bills will improve the efficiency of health insurance companies by allowing them to discontinue older products which are no longer appropriate. Maintaining these policies, sometimes with small numbers of participants, can be an expensive drag on the efficiency of insurers. This drives up premiums for everyone. Frankly, in total, the bills before us show us the stark contrast that will face the Australian people at the next election when it comes to health.

On our side the coalition and our excellent Minister for Health, who has joined us here now, are addressing the real challenge of an ageing population and growing demand on our health services by working all of the levers available to a government. We are providing record funding to our public hospitals and record funding to Medicare to do what we can to ensure that the public system has the expanded capacity that it needs. That has delivered the highest bulk-billing rates ever recorded, ensuring that more Australians than ever are able to visit their GP without paying, and keeping as many as possible away from the hospital system.

Alongside that action to increase capacity we're also working to reduce demand, through this bill and its associated reform package. Already our reforms have seen the lowest private health premiums increase in 17 years. Whilst Labor talk about it, we do it. However, this government never rests on its laurels. Now is the time to capitalise on that achievement and go further. By making private health insurance more affordable for younger Australians, by increasing the attractiveness and flexibility of the services offered and by allowing insurers to be more efficient, we're helping to reverse the decline in private health insurance membership and thus reducing the demand on our public hospitals.

What in contrast is Labor's approach to solving the ballooning demand on our health services caused by our ageing population? Empty promises, budget black holes and bald lies. When it comes to private health insurance they want to increase the cost of premiums by 16 per cent, by banning the most affordable policies. They have failed to rule out cutting the rebate, as they did by $4 billion when they were last in government.

Just this week we saw more of this in my electorate of Fisher. As members will know, the Sunshine Coast is a growing healthcare hub and at its heart is our new multibillion dollar Sunshine Coast University Hospital. This is a fantastic facility, filled with dedicated and hardworking healthcare professionals, including my own daughter. However, just 14 months after opening, despite increasing Commonwealth government funding, my LNP state colleague Mark McArdle, the member for Caloundra, has ascertained that ramping is on the increase, that ambulances are facing longer waits for their patients to be admitted, and that local patients are being forced to divert to the older Nambour facility.

I am sad to say that it would appear that our hospital is becoming a victim of the state Labor government's total incompetence and mismanagement. State Labor health minister Steven Miles's response was as predictable as it was useless. He said, 'Everything is fine; nothing to see,' despite the evidence to the contrary, and, 'In any case, it is the fault of the Turnbull government for cutting hospital funding and Medicare.' Commonwealth hospital funding in our state is at record levels, growing from $2.7 billion in 2012-13 to $3.9 billion in 2016-17. That's an increase provided by the Turnbull government of 46 per cent in just four years. In contrast, Minister Miles's Queensland Labor government reduced health services funding in 2017 by $63.8 million. These are straightforward lies in place of any plan to fix the problem.

I'm pleased to say that the people of Australia have seen through this Labor Party and their dishonest 'Mediscare' campaign orchestrated by the leader of the lamentables, the patriarch of the pitiful, the master of the miserable and the commander of the calamitous—that is, the Leader of the Opposition. The people of Australia are onto this bloke. They know that a fantasy funding promise and a fake Medicare card covered in lies won't get you very far when you're ill and in need of treatment. They know that a torrent of dodgy and baseless complaints about imaginary cuts is no substitute for the Turnbull government's pragmatic and comprehensive policymaking.

The people of my electorate of Fisher and all Australians want to see a public hospital system that works. To do that, we need the extra investment that the Turnbull government is already providing and we also need to reduce demand through increasing the take-up of private health insurance. That is what this legislation will achieve. For that reason, I commend this bill to the House.

Greg Hunt (Flinders, Liberal Party, Minister for Health) Share this | Link to this | Hansard source

I take the opportunity today to sum up on the bill before the House, the Private Health Insurance Legislation Amendment Bill 2018, and on the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018 and the Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018. Private health insurance is a fundamental element of the Australian health system. It is supported by the government, and more than 50 per cent of Australians have some form of private health insurance.

The package of reforms I announced last October will help strengthen the viability of the private health system by addressing concerns about the affordability, complexity and lack of transparency of private health insurance. In addition to the investment of over $6 billion for the private health insurance rebate, this government continues to take pressure off private health insurance premiums, with the introduction of these reforms delivering the lowest annual premium change in almost two decades.

The Private Health Insurance Legislation Amendment Bill 2018 will amend the Private Health Insurance Act 2007 and associated legislation to support a number of the reforms I announced last year. The Private Health Insurance Legislation Amendment Bill 2018 will increase maximum excess levels for products providing an exemption from the Medicare levy surcharge. This will improve affordability for consumers and will be the first time excesses have been increased since 2001. It will do so on an opt-in basis, which will allow consumers and premium-holders to choose whether or not they wish to take that option.

The bill will allow for age based premium discounts for hospital cover. This reform will improve the affordability of private health insurance for young Australians and provide them with the benefit of their choice of doctor, timing of treatment and shorter waiting times.

Amendments in the bill will strengthen the powers of the Private Health Insurance Ombudsman to protect consumers' interests. The Private Health Insurance Ombudsman will be able to conduct inspections or audits at insurers' premises to verify accuracy of information. Private health insurers will be able to cover travel and accommodation costs as a part of a hospital product for people in regional and rural Australia attending health services often a long distance from their home. Patients and their carers are likely to see increased value from their product due to this change.

Private health insurance can be complex and confusing. Certainly this is what we heard from consumers in the online survey which had over 40,000 respondents. We want to make information simpler and more transparent for consumers. The first step in this process is the introduction of a new private health insurance statement which will replace the current standard information statement insurers are required to provide. The private health insurance statement will offer more flexibility for insurers to provide information that is relevant and personalised for their consumers.

Reforms will be made to the administration of second-tier default benefit arrangements for hospitals. These changes will reduce the administrative burden on both private hospitals and health insurers.

This bill will facilitate the termination of closed products and migration of people to new products. This change will make it easier for people to compare products and will generate considerable efficiencies in the system.

The revised explanatory memorandum to the bill makes it clear that private health insurers have consistently provided access to the Private Health Insurance Ombudsman's investigating officers to verify the accuracy of information, and this is expected to continue. It is expected that the PHIO would continue to provide private health insurers with at least 24 hours knowledge of access to best assist with investigations. The purpose of entry in these circumstances is not to obtain evidence to support a criminal or civil prosecution; the intention is to confirm information provided by a consumer and to enable the PHIO to make non-binding recommendations, having received comprehensive information from both parties.

The government recognises that benefit limitation periods can be an area of confusion for some private health insurance members, and it has now decided that all benefit limitation periods should be removed to make private health insurance products easier to understand for consumers. Although benefit limitation periods have been applied under the Private Health Insurance Act since 2007, the act prohibits benefit limitation periods longer than specified maximum waiting periods. Consequently, many health insurance policies may have not met the requirements of the act since it was introduced in 2007. Changes to the act will ensure people who may have purchased noncompliant private health insurance policies, and insurers who may have sold those products over the last decade, are essentially placed in the same legal position they would have been in if the products had complied with the act. To this effect it will appropriately protect both consumers of private health insurance and private health insurers.

The two tax bills—the Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Bill and A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018—deal with taxation related aspects of the reform. These changes ensure individuals purchasing appropriate complying health insurance products for private hospital cover with increased excess levels will be able to claim the Medicare levy surcharge exemption. While the legislation brings into effect a number of important reforms, a lot of the detail will be provided in the private health insurance rules, and the government will also be consulting on the details of the rules. I thank all of those within the industry, the broader health sector, the department and my office for their work in helping to progress this, in particular my principal advisor, Alex Caroly. I thank members for their contribution to the debate on these bills, and I commend the bills to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Order! The original question was that this bill be now read a second time. To this the honourable member for Ballarat has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment moved by the member for Ballarat be agreed to.