Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Private Health Insurance Legislation Amendment Bill 2009 will amend the Private Health Insurance Act 2007 and the Age Discrimination Act 2004.

The commencement day for provisions dealing with extended family policies and surplus assets is the later of 1 July 2009 and the day on which the Act receives Royal Assent. The commencement day for provisions dealing with amendments to the Private Health Insurance Act 2007 which are a consequence of the Private Health Insurance (National Joint Replacement Register Levy) Bill 2009 is the same time as the commencement of the proposed Private Health Insurance (National Joint Replacement Register Levy) Act 2009.

The amendments will permanently allow private health insurers to offer extended family policies that cover people aged 18 to 24 (inclusive), who do not have a partner, are not receiving a full time education at school, college or university and where the fund rules of a private health insurer provide for this group.

The Bill also includes consequential amendments to the Private Health Insurance Act 2007, consistent with the introduction of the Private Health Insurance (National Joint Replacement Register Levy) Bill 2009 which imposes a levy upon sponsors of joint replacement prostheses in order to recover the costs of maintaining the National Joint Replacement Register (NJRR).

Extended family policies

The 18 to 24 age group has relatively low participation in private health insurance. Private health insurers developed extended family policies to encourage 18-24 year olds to continue their health cover into adulthood. Under the Private Health Insurance Complying Product Rules 2008 (No 3), transitional arrangements were made to allow these extended family policies to continue until 31 December 2009.

The Bill will amend the Private Health Insurance Act 2007 to allow insurers to permanently offer extended family insurance policies.

While premiums on an extended dependent family policy can be more than other family policies covering just younger children and older students, most importantly, the overall cost should nonetheless be lower than if such young adults had to take out their own separate policy.

This will make it more attractive for people aged under 25 to remain in private health insurance.

This is a win-win amendment. It is a win for the private health industry as it will be able continue to offer an attractive product for families and young adults, and it is a win for many families who will be able to save money by utilising extended dependent private health insurance policies.

The Bill also amends the Age Discrimination Act 2004 to provide an exemption from any unlawful age discrimination under that Act which may arise from allowing a higher premium to be set for policies that include ‘dependent child non-students’.

National Joint Replacement Register Levy

A new cost recovery Act to fund the National Joint Replacement Register has been proposed and will commence on 1 July 2009 or, if later, the day of Royal Assent. The Bill includes consequential amendments related to the National Joint Replacement Registry Levy, with respect to the administration of the levy.

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

The coalition supports the Private Health Insurance Legislation Amendment Bill 2009. It is the first and only and, indeed, very lonely positive legislative initiative of this government in relation to private health insurance. It, of course, comes after the disastrous changes last year to the Medicare levy surcharge thresholds, which the government expects will see nearly 500,000 fewer people in private health insurance. It comes after Labor’s broken promise on private health insurance rebates, which will see a further 40,000 people leave private health insurance with all of the disastrous related consequences for our public health system and with all the related disastrous consequences in terms of the cost of private heath insurance for the 11 million Australians that do take additional responsibility for their own healthcare needs.

As I said, this is a positive initiative. This bill will add a new category to the groups to which private health insurers can offer insurance policies. Currently, the Private Health Insurance Act requires that insurers are only allowed to offer policies to particular insured groups—namely, singles, couples and families with dependent children. Since late 2007 the rules were changed to include another extended family category, which included ‘dependent children non-students’. This category allowed family policies to cover people between the ages of 18 and 24 who were single and not in full-time education. The category was developed by health insurers to encourage young adults to maintain health insurance cover into adulthood.

The arrangements however have been temporary and this bill proposes amendments to insert the category of ‘dependent child non-student’ into the Private Health Insurance Act. This will enable insurers to offer policies to this group on a permanent basis. Health insurers will be able to charge higher premiums for these extended family policies than for others; however, the premium is expected to be less than that charged to a young, single individual if they were forced to take out their own cover. With the percentage of people in the 20- to 24-year age grouping covered by private health insurance in decline, down to 3.9 per cent in 2008, it is hoped that this measure will make insurance under the family policy umbrella more attractive and see younger people remain covered by insurance.

Of course we will have to wait and see because the positive impact of this measure will be offset to a very significant degree by the disastrous consequences of successive attacks by the Rudd Labor government on Australians with private health insurance. These successive attacks will see the cost of private health insurance increase overall and in excess of 500,000 fewer Australians covered by private health insurance—attacks that are going to have a disastrous impact on our health system overall. Very specifically as a result of the broken promise on private health insurance rebates, more than 2.3 million Australians are expected to see an automatic increase in their private health insurance of between a staggering 14.3 to 66.7 per cent.

The government initially told us that 25,000 people would leave as a result. During estimates that became 40,000 people. Access Economics has estimated that it could be up to 100,000 people. The government in its rhetoric has been trying to point to Private Health Insurance Administration Council data to suggest that the expectation of last year, of there being nearly half a million fewer Australians in private health insurance as a result of the Medicare levy surcharge changes, had not come out. But of course during the Senate estimates both the health department and the Treasury confirmed that the government continues to expect, and indeed continues to need, 500,000 fewer Australians to be covered by private health insurance in order to achieve the savings that it has included in the budget estimates. So with those few remarks I confirm that the coalition support this initiative. We consider this to be a positive initiative. But what a shame it is that the government could not take this sort of attitude to our health system more often.

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I thank Senator Cormann for the support of the Liberal-National Party opposition in the Senate. Of course I do not agree with his editorial on the general approach of this Labor government in respect of private health insurance. The Labor government supports a strong private and public health system, and many of the prophecies of doom that Senator Cormann has been making of course have not come to fruition.

Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Link to this | Hansard source

They’re still in your budget estimates.

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I did not interrupt the senator when he was speaking. It is the end of the session and we are here to deal with important budget bills. The senator should calm down. The Private Health Insurance Legislation Amendment Bill 2009 will amend the Private Health Insurance Act 2007 and the Age Discrimination Act 2004. The amendments will permanently allow private health insurers to offer extended family policies that cover people aged 18 to 24 inclusive who do not have a partner, who are not studying full-time at school, college or university and where the fund rules of a private health insurer provide for this group.

The private health insurers developed extended family policies to encourage 18- to 24-year-olds to continue their health cover into adulthood. Under the Private Health Insurance (Complying Product) Amendment Rules 2008 (No. 3) transitional arrangements were made to allow these extended family policies to continue until 31 December 2009. The bill will amend the Private Health Insurance Act 2007 to allow insurers to permanently offer extended family insurance policies. The bill also amends the Age Discrimination Act 2004 to provide an exemption for any unlawful age discrimination under the act which may arise from allowing a higher premium to be set for extended family policies.

The bill also includes consequential amendments to the Private Health Insurance Act 2007 consistent with the introduction of the Private Health Insurance (National Joint Replacement Register Levy) Bill 2009, which imposes a levy upon sponsors of joint replacement prostheses in order to recover the costs of maintaining the National Joint Replacement Register. The Private Health Insurance (National Joint Replacement Register Levy) Bill 2009 was passed on 18 June 2009. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.