Nick Xenophon (SA, Independent) Share this | Hansard source

I note the comments that Senator Fierravanti-Wells made on behalf of the coalition about the fact that there are 12½ million Australians with private health insurance. I am one of those 12½ million Australians. It is important that we have a good balance between the public and private systems. I have serious concerns about the unintended consequences of the provisions in these bills: the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 and the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013.

I have spoken before in this chamber on many occasions about the need for balance between Australia's public and private health systems. Back in 2008, I negotiated with the government as part of my support for health related legislation for there to be a Productivity Commission report on the public and private hospital systems and a fair comparison between the two. That report, which was published in December 2009 and was over 400 pages long, provides a lot of very good and useful information about the need for both systems, the way that they interact with each other, their relative efficiencies, how the private system can be more efficient in a number of areas and how the public system can play a valuable role and also be more efficient in other areas. But you need a balance between the two.

My fear is that this legislation will make matters much, much worse and destroy that delicate equilibrium between the two systems. Access to affordable health care is a human right. But there is no escaping the fact that our public system is struggling, with waiting lists for treatments blowing out and practitioners battling to keep up with increased demand on the one hand and budget cuts on the other.

While we have a health system that many in the world envy, we cannot ignore the fact that it relies on a delicate balance between the public and private systems. If we tip the scales too much one way or the other, we risk putting those systems under too much strain. The measures included in the Lifetime Health Cover loading will be bad for consumers and bad for both the public and private systems. I acknowledge the opposition is intending to move amendments to remove that particular schedule from the bill, and I support that amendment. I also have serious concerns about the provisions in the Private Health Insurance Legislation Amendment (Base Premium) Bill 2013.

I believe that this will have a negative impact on the rebate, and therefore on people's ability to afford private health insurance. Artificially setting premiums for the purpose of the rebate may be a cost-saving measure in the short term, but its long-term effects could be drastic. I note that both bills were referred to the Senate Standing Committee on Community Affairs for inquiry, and that the committee recommended both bills be passed.

However, the committee report into the Lifetime Health Cover Loading bill included evidence from the department itself that the effect of the provisions in the bill could mean an increase of $116 per person per annum. On the other hand, health funds estimated that the impact would be even higher. GMHBA in particular stated:

… the removal of the rebate on the Lifetime Health Cover loading component of Private Health Insurance premiums will result in a further 1% to 18% (average of 10.6%) price increase from the 1 July 2013 for those with Lifetime Health Cover loadings. This will impact approximately 17.9% of GMHBA memberships (approximately 40,000 individuals). In simple terms the removal of the rebate means a 42% increase in the loading for these members.

A 42 per cent increase is a very significant amount. This is a significant amount for many people, including the elderly and those on low incomes. These people do the right thing and choose to have private health insurance to protect themselves, and now the government risks putting that protection out of reach.

In particular, GMHBA stated:

According to Private Healthcare Australia - the Australian Taxation Office & Australian Bureau of Statistics, 3.4 million people with private health insurance live in households with incomes less than $35,000 per annum. A staggering 5.6 million people with private health insurance live in households with gross annual incomes below $50,000.

We should be making it easier for people on low incomes to access private health, not harder.

On a similar line, submissions to the committee on the base premium bill expressed concerns about the impact on low-income earners. National Seniors Australia stated:

The decision to increase the rebate each year in line with the lower of the CPI or the Government-approved increase to premiums is discouraging to older Australians who have attempted to provide for their own health care.

The other concern is that health care has become so complex that consumers will give up trying to understand what they should be paying and what the best deal for them is, and will end up paying more anyway. Australian Unity explained it in this way:

For consumers, health insurance will be more expensive and more opaque because of the proposed legislative changes. To determine their costs, consumers must now apply the relevant (Australian Government Rebate) percentage to the ‘base premium’ for the relevant product, which is directly linked to general CPI. After determining their AGR entitlement, it is deducted from the ‘commercial’ premium to finally calculate the level of direct contribution they are required to make to their health insurer.

The situation is further complicated for consumers who incur a lifetime health cover (LHC) loading. The LHC loading is calculated with reference to the ‘commercial premium’, not the ‘base premium’ and added to the direct contribution the consumer must make.

I hope you understood that, Mr Deputy President, because it is quite baffling. Private funds are also concerned about the impact on the way they run their businesses, and whether increased administration will lead to increased costs.

There is also the serious question of whether the base premium will undermine Australia's community rating system. Under this system, people pay the same premiums regardless of how likely they are to use their cover. Creating a base premium will mean higher costs to consumers, which may mean insurers will have to charge more to clients with a higher risk profile.

These bills risk a lot for short-term, narrow gains. I believe any benefits achieved by these bills in terms of revenue are far outweighed by the negatives for consumers and for the way that this could destroy that delicate balance between the private and public systems. In all good conscience, I cannot support these bills.