Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Hansard source

I rise to speak on the Private Health Insurance Legislation Amendment Bill 2018 and the related bills. Australians are doing it tough under this government, no matter who it makes Prime Minister. Wages are stagnating, work is becoming more insecure and bills, such as power bills and private health insurance bills, are skyrocketing, partly because this dysfunctional government cannot work together with a coherent policy agenda. One of the worst costs for members of our community is the skyrocketing increase in the cost of private health insurance. For years, private health insurance premiums have been rising at triple the rate of inflation, way above the pace of wages, and families are paying an average of $1,000 more than they were when the Liberals came into power in 2013. According to a recent report by CHOICE, 77 per cent of those with private health insurance are struggling to meet the cost of their policies. That's an extraordinary number of the population. Things are clearly not working.

This country is in the midst of a private health affordability crisis. People are downgrading or even dropping their cover altogether in droves, putting the entire industry at risk of a death spiral. Prices are up and profits are up, but quality and value are way, way down. Meanwhile, we see scandals in the industry and we see insurance company chiefs somehow thinking it is okay to spend hundreds of thousands of dollars of their members' money to attend junkets like the one in Portugal. Reports say that there were business-class airfares, opulent hotels, fine dining and even a luxury cruise, and that a number of officials tacked on private European jaunts. How does this help any Australian facing huge out-of-pocket costs for surgery or a hospital stay? And how does it help to bring down the price of premiums?

No wonder Australians are angry. Australians are paying a lot more for their health insurance policies and getting a whole lot less. Ten years ago, only 8.6 per cent of health insurance policies contained exclusions. Now it's 40 per cent—40 per cent of policies now contain exclusions. These exclusions are often hidden in the fine print, meaning that people are paying for insurance without being covered. It's just turning health insurance into a con. We've all heard of people who go to their doctor needing cataracts removed or knee surgery or a hip replacement or a hysterectomy and are told that, even though they are paying some of the highest out-of-pocket costs in the OECD and even though they're paying in excess of $4,000 to their private provider, it just so happens that that particular procedure isn't covered by their insurer.

While there are many small operators and not-for-profits doing good work, the larger players in the industry raked in $1.8 billion in profit before tax last year, and yet Mr Morrison still wants to give a tax cut to these large companies. I think it's pretty informative to have a look at the profits of the health insurers in context. Most publicly listed companies get a return on equity of about eight per cent, and the banks—the ones we've seen ripping off consumers—average well north of 10 per cent. But do you know how much some of the biggest health insurance providers pocket—how much their return is? Over 20 per cent. It's astronomical! And, not only that, it's really concerning, considering what people are getting. People aren't getting bang for their buck.

This is an industry holding about $6 billion over and above the legal capital requirement, as well as receiving $6 billion in taxpayer-funded subsidies each year. Yet, despite having large cash reserves, profits in the billions and government support, the private insurers keep aggressively increasing their premiums each year. This year alone, some families with two kids are facing $200 premium increases. That's a real struggle for families trying to balance a budget. Two hundred dollars can mean a lot to a family living on the line. It might mean that they don't buy as many groceries or that the kids miss out on a school excursion or can't access some sporting activity. I could list any number of things that that $200 could be better spent on. It has got to the point where some insurers are just gouging consumers. And it has got to stop.

Today we're looking at minor changes to private health insurance. In October 2017, the government announced a range of mostly minor changes to private health insurance arrangements, following a reform process that began in late 2015. This package of three bills implements the changes that require legislation. The government's private health insurance package also includes a number of changes that are not reflected in these bills because they don't require legislation.

The principal bill in the package is the Private Health Insurance Legislation Amendment Bill 2018, and that makes eight changes to current arrangements, including four about which we have expressed scepticism or concern. The two minor bills in this package are 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. They amend the A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Act 1999 and the Medicare Levy Act 1986 to allow increased maximum excess levels. They also repeal grandfathering provisions that had allowed policies with higher excesses than the current maximums. These policies were grandfathered when the current maximums were introduced in 2000, but they will no longer be compliant for the purposes of the rebate surcharge or lifetime health cover loading.

The opposition welcomes elements of the bill that strengthen the powers of the Private Health Insurance Ombudsman. We have also welcomed changes that allow insurers to include travel and accommodation costs under hospital treatment products to help people in rural and remote Australia access care. But, ultimately, we don't believe these bills will deliver significant savings to Australian consumers. And it's not just us saying that; it is groups like the AMA, and some of the health funds themselves have said the same thing. Having said that, we believe Australians need and deserve every bit of price relief they can get. As an alternative, Labor have a real plan to rein in soaring private health insurance costs because Labor understand that we have to put downward pressure on family budgets. We have to make life easier for everyday Australians because they are being ground underfoot under this Abbott-Turnbull-Morrison government.

Under the Private Health Insurance Act, the Minister for Health is required to approve the premium increases that take effect each April. Under the act, the minister can reject changes that are deemed not to be in the public interest. Labor will not improve any increases above two per cent in its first two years in government. Labor will manage the implementation of this cap through the Australian Prudential Regulation Authority, particularly with respect to ensuring the viability of not-for-profit insurers. By capping premium increases at two per cent for two years, effectively tying them to general inflation, a Shorten Labor government would deliver real relief to 13 million Australian consumers struggling with the cost of living. This tough policy will put an average of $340 back into the pockets of Australian families and savings of around $150 for young singles and around $290 for young couples. Labor's policy will benefit over 13 million Australians, including 267,000 in my home state of Tasmania. And, might I say, with me I have Senator Polley and Senator Urquhart, who are both great Tasmanian senators as well. It will benefit 267,000 in our home state.