Monday, 10 September 2018
Private Health Insurance Legislation Amendment Bill 2018, A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018, Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018; In Committee
by leave—The Greens oppose schedule 1 and schedule 2 in the following terms:
(4) Schedule 1, page 3 (line 1) to page 4 (line 3), to be opposed.
(5) Schedule 2, page 5 (line 1) to page 6 (line 10), to be opposed.
The reason that I'm proposing these amendments is—if we look at what amendment (4) on sheet 8504 does—this seeks to remove schedule 1, relating to increasing the maximum excess levels, from the bill. Under this proposal, what we are looking at is a proposal to increase the excess for singles from $500 to $750 and for families from $1,000 to $1,500.
The supposed point of private health insurance and the enormous subsidies that go towards it are so that people are more inclined to use their private health insurance cover and to ease the pressure on our public health system. That is the intended purpose. We know it has failed to achieve that. We know that, in fact, the huge subsidies—the tens of billions of dollars that have been given to the private health insurance industry in the form of the rebate and a whole range of other penalties, tax concessions and so on—don't take the pressure off our public hospital system. What we do know is that, by increasing the excess for both singles and families, we are going to see people becoming less likely to utilise their cover when the time comes. We know that many people are taking private health insurance out simply to avoid paying the penalties associated with things such as the Medicare levy surcharge. What we also know is that the higher the level of excess, the more likely it is that people won't use their cover when it comes to having a procedure done within the private system. Higher excesses will discourage people from claiming on their products.
What does that mean? It means, in practice, that you have provided an incentive for people to take cover. Some of those people will be liable to receive a rebate—that is, a taxation benefit, a subsidy, that is paid for by people who don't have private health insurance, let me remind you—in order to do what? It is not to use that product so that we have fewer procedures done within the public system. It's done so that more people take out a product they don't use to effectively create a larger pool of customers and to ensure that the risk is spread across those customers. But it provides very little or no benefit to the individuals who might take out that cover as a result of that incentive.
Amendment (4) opposes increasing maximum excess levels. If the principle here is that this is being done to ease some pressure on the public health system—at least, according to the government—then it should be easier for people to use their cover when the time comes for a procedure. Increasing the excess, saying to somebody, 'It's now going to cost you an extra $500 if you want to use your private health cover for a procedure,' makes it harder, not easier. This goes against the very purpose stated by this government about why it seeks to have more people with private health insurance cover.
Amendment (5) seeks to remove the discounts which are aged based—that is, for younger people. This bill allows insurers to offer discounted products to people aged between 19 and 29 of up to two per cent each year before the age of 30. As I said in my speech, this goes against the very principle of community rating, on which private health insurance is based. What it does do is undermine that principle, and it says, 'We're now going to provide incentives for you if you're younger.' Of course, conversely, it may open the door to higher premiums for people who are older and likely to use the product. It undermines the whole principle of community rating. So it's not going to have any positive effect. Indeed, the Grattan Institute's Stephen Duckett—himself a former secretary of the department—said that it's unlikely to have any real impact on premiums.
Consider what this government is doing to young people right now. Right now, if you're a young person in this country, you're being screwed over. You're being priced out of the housing market because we've got a government that's not prepared to tackle negative gearing and investors that are crowding young people out of the housing market. If you're a young person right now and you want to get an education, you're being lumbered with higher up-front costs. The cost of a degree is going up and the threshold at which people have to pay back their HECS has gone down, so a whole generation of young people are being lumbered with debt—and it must be said—by the very same people who benefited from a free education. These are the people who are pulling the drawbridge up behind them.
Of course, it's not just education and housing but climate change. We are dealing with a catastrophic, impending climate disaster because we have a government that now has no energy policy and, according to its own Energy Security Board, no chance of meeting the targets it set for us in Paris. They've effectively walked away from those climate targets. They're saying to younger people, 'You're going to have to clean up the mess that we leave behind.'
They're trying to do the same in health care. In health care they're saying to young people, 'Take out private health insurance. We'll provide a discount for you, even though this won't benefit you; it will benefit those people who are older and who are more likely to need the product.' I say to young people right now: don't get sucked in. Don't do it. If you're a young person right now and you're not going to be penalised for not taking out private health insurance, don't do it. We know from the department—who've said it themselves—that they understand this is a way of increasing the number of people taking out the product but not providing a benefit to the younger people who are less likely to use it. As a doctor I often get asked: 'I'm a young person, should I take out private health insurance?' My advice is very straightforward. If you're a young, fit, healthy person, it's a rort; it's a waste of money. Put that money aside for if you need to see a physio or get a pair of glasses or go to the dentist. It's much better sitting in a bank account than lining the pockets of private health insurance companies.
The reality is that we as a society should be investing in our public health system, providing a much more efficient way of delivering health care for our community, rather than seeking to create a US two-tiered health system, which is what these changes would drive us towards. They are trying to create a bigger pool of people taking out private health insurance, because people are awake to the rort that it's become. The cost of premiums is going up and the level of cover is going down. No wonder people are deserting private health insurance cover. What we should be doing instead is having root and branch reform of our private health insurance system. People have every right to take out private health insurance. However, their choice in taking out private health insurance should not be subsidised by the taxpayer to the tune of billions of dollars. What we have now is people without private health insurance subsidising the private health insurance cover of the people who take it out. That's a massive redistribution of wealth from people who are on lower incomes to people who are on higher incomes. We know that's the reality for people who take out private health insurance. It is skewed towards people on higher incomes.
Even those people who are concerned about the running down of our public health system and make a huge sacrifice to take out private health insurance cover are doing it because they have lost faith in the preparedness of the government to invest in Medicare and in our public hospitals. I understand why they do it. But demand of your governments a well-funded public health system, because tinkering around the edges of private health care won't improve our health system. We know this from experience. Look at the US. They spend on health care nearly double what we spend, because they have a model that this government aspires for Australia to have.
We are putting forward both of these amendments—both amendment (4) so that we remove the increase to the maximum excess, and amendment (5), the age based discounts for hospital cover, because we don't want to see a bad problem made worse. That's what this government is proposing to do. We now have close to $30 billion over the forward estimates going into a system that is failing Australians. If we want to deal with up-front costs, which have become a blight on our health system, if we want to deal with the fact that we have private health insurance ripping off consumers by reducing their level of cover and by making it harder for people to utilise their cover when taking it out, this is not what you do.
A 21st century health system that's based on the principles of equity and efficiency ensures that we have a well-funded, public, universal healthcare insurer. That's what Medicare is, that's what funding our public hospital system delivers, and that is the reform blueprint that will ensure people in this country get access to the health care they need—not these changes, which we know the Labor Party will continue to support. We know that they won't get to the root of the problem, which is this massive rort that has become the huge subsidies that go to prop up an industry that cares about its bottom line but doesn't care for patients.
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.
I just want to respond to Senator Scullion. It won't benefit you because you'll have spent a fortune and got nothing out of it. It won't benefit you because you will have spent money for a product that covers the same range of services that you should be able to get under a well-funded public health system. Senator Scullion, your logic is that, instead of being 40 or 50 grand out of pocket, you'll only be 30 or 40 grand out of pocket and that somehow that represents a savings. I think that says more about your understanding of economics than it says about mine. The reality is that, for most young people in this country, taking out private health insurance is a bad economic option. Sure, private health insurance allows you to have the doctor of your choosing; that is true. But, in a market like health care where people don't have a clear understanding of what the options are and the benefits they get from that, that's actually a false choice. It may allow you to be bumped up a waiting list and have a procedure done earlier than you otherwise would. But, again, for young people those procedures are few and far between.
Ultimately, if we were to invest the subsidies that go towards private health into our public health system, that wouldn't be a choice that would even be worth considering, because everybody in this country would be able to have the surgery they need. Whether it's having a hip replaced, the dental care they need or an elective procedure, they would be able to have it done within a reasonable time frame within our public system. But that choice is taken away from people when we divert close to $30 billion over the forward estimates into a system that delivers no value for patients. But, gee, it delivers value for shareholders of those private health insurance companies!
No, this is the wrong way for any decent society to go when it comes to providing health care. We know from international experience that the most efficient model is the one where there is a single universal insurer, funded through taxes, providing health care to everybody when and where they need it. We've got that here in Australia. It's called Medicare. Let's fund it properly rather than starving it and lining the pockets of big corporations.
One of the things this government does trust is the intelligence of young people in Australia. There is no compulsion whatsoever in this, Senator Di Natale. This is simply an offering so that those people who, due to their circumstances, choose this as the right product for them can then enter that market. We are presenting no position other than to say, 'This should be a choice.' This is another choice. Young Australians are intelligent. There is no compulsion in this. I'm quite sure they will be able to make a decision based on their particular circumstances at any time in the future.
by leave—I move, in respect of the Private Health Insurance Legislation Amendment Bill 2018, government amendments (1) to (5) on sheet LP101 together:
(1) Clause 2, page 2 (table item 3), omit the table item, substitute:
(2) Schedule 3, item 4, page 10 (after line 6), after subsection 20ZHA(1), insert:
(1A) Before entering the place, the Private Health Insurance Ombudsman must give the occupier of the place at least 48 hours' written notice of the Private Health Insurance Ombudsman's intention to enter the place.
[notice of entry]
(3) Schedule 3, items 6 and 7, page 11 (lines 28 to 32), omit the items, substitute:
6 Subsection 34(2C)
Omit "to a member of staff mentioned in section 31 all or any of his or her powers or functions under this Act, other than his or her powers under section 20R and 20V", substitute "all or any of the Private Health Insurance Ombudsman's functions or powers under this Act (other than those under section 20R, paragraph 20SB(4) (b) and section 20V) to a person whom the Private Health Insurance Ombudsman considers has expertise appropriate to the function or power delegated".
(4) Schedule 3, item 8, page 12 (line 4), omit "1 July 2018", substitute "the day this item commences".
(5) Schedule 3, item 9, page 12 (line 7), omit "1 July 2018", substitute "the day this item commences".
In response to the Senate Standing Committee on the Scrutiny of Bills report on this legislation and some comments to the Senate inquiry into this legislation, the amendments have been drafted to require that the Private Health Insurance Ombudsman provide 48 hours written notice before exercising new entry and inspection powers, and only delegate his or her functions or powers to persons the Private Health Insurance Ombudsman considers to have appropriate expertise. Additional powers given to the Private Health Insurance Ombudsman in this bill are consistent with the Commonwealth Ombudsman's powers in other areas it is responsible for, including oversight and inspection of approximately 20 law enforcement agencies. The requirement for 48 hours notice responds to questions about unannounced inspections and audits, including industry concerns that they may be inadequately prepared or under-resourced to accommodate unannounced inspections.
With respect to the delegation provisions, the bill provides for the delegation of functions or powers of the Private Health Insurance Ombudsman to any person. The act currently provides a delegation to staff members, but a broader delegation is important to ensure the seamless and efficient implementation of the new powers. These government amendments will ensure the powers and functions are only delegated to a person whom the Private Health Insurance Ombudsman considers to have the appropriate expertise. The government amendments to the bill will also amend the commencement date for these changes from 1 July 2018 to the day after royal assent, as they are not intended to be retrospective.
Question agreed to.
Private Health Insurance Legislation Amendment Bill 2018, as amended, agreed to; A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018 and Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018 agreed to.
Private Health Insurance Legislation Amendment Bill 2018 reported with amendments; A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018 and Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018 reported without amendments; report adopted.