Nigel Scullion (NT, Country Liberal Party, Minister for Indigenous Affairs) Share this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to the Private Health Insurance Legislation Amendment Bill and related legislation. Greens amendment (4) on sheet 8504 will have the effect of stopping the proposed increase in the maximum excess levels from $500 for singles and $1,000 for families to $750 excess for singles and $1,500 for families. The excess levels, whether you're dealing with other sorts of insurance, like car, home and contents insurance, are regularly moved and reviewed. This bill proposes to restore the excess to the 2001 equivalent. The current maximum excess levels haven't been increased since 2001. An excess of $750 will be equal to about a sixth of the cost of an average hospital stay, which was about $500 when the current level was set back in 2001. Under the current arrangements only about 40 per cent of people buy policies with the maximum allowed excess. This suggests that people are making a conscious trade-off, as we all do so often when purchasing insurance. They are making a conscious trade-off between premium costs and that gap amount that they will need to pay if they need to go to hospital. There's no reason to suppose that the availability of a higher excess will lead to people opting for amounts they'll not be able to afford if they're hospitalised. We looked to some of the evidence of the Senate committee inquiry into the bill. The Consumers Health Forum noted in its evidence to the Senate committee that consumers understand the notion of excesses, as they are features of other forms of insurance such as car, home and contents, and travel insurance. For those reasons, we wouldn't be accepting the Greens' amendment (4).

I will move to amendment (5) on sheet 8504. The Australian system of community-rated private health insurance relies on a pool of insured people with an age structure broadly reflective of the population as a whole. However, people aged between 20 and 30 currently have a very low participation rate in private health insurance. This is partly because of the system of lifetime health cover, which applies premium loading to people who purchase private health insurance later in life. It only starts to operate after the age of 30, so there are no positive incentives to encourage younger people to purchase insurance. Senator Di Natale, whilst you do make the point that younger people are healthy and maybe not in need of that—and there's no question around that—there is a choice that exists within that range. Allowing insurance companies to offer discounts to people under 30 will allow them to provide some incentive to encourage young people into a private health insurance pool. A discount of 10 per cent on a mid-range product with a $2,000 premium will provide a 25-year-old with savings of well over $3,000 by the time they're 45. A $200 per annum saving is effectively what this does, and the Greens' amendment would take that away. Without being too cheeky, Senator, I hope you don't mind if I just quote you. When you were talking to the young people of Australia you said, 'This won't benefit you and don't get sucked in.' This will benefit you. By the time you're 45, you'll be $3,000 up; you'll be up $200 a year. We aren't sucked in, and the government won't be supporting these amendments.