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Tuesday, 3 March 1998
Page: 209


Dr SOUTHCOTT (6:04 PM) —I have heard the opposition minister for health, the member for Dobell (Mr Lee), put up MPI after MPI on private health insurance, and it is always the same thing. I have never heard him offer one constructive solution for private health insurance. I have never heard him address the problems that private health insurance is facing. He has just spent 15 minutes criticising the government's private health insurance incentives. This is the ALP's 1996 policy document. The member for Dobell has just spent 15 minutes criticising the government's private health insurance incentives.

What would Labor have done if it were elected? If it were elected, Labor was going to offer a $350 family payment, a flat rebate, for the cost of private health insurance. Labor was offering incentives for private health insurance. Labor was committed to the same policy as the government. You have to ask the Australian Labor Party what they would do with the incentives for private health insurance. Would they scrap them? They would not say. At the ALP conference in January the shadow minister for health would not say whether he would scrap the private health insurance incentives. Are you going to scrap them to pay for public hospitals? The Australian people want to know. At the moment he has $6 billion of unfunded health policy promises.

It is important to reflect on some of the benefits that we have in the Australian health system. Australia spends between eight and nine per cent of GDP on a health system that is more comprehensive than that of the United States. The Labor Party has never been committed to private health insurance. Perhaps they would like to see a system more weighted towards public hospitals. That certainly seems to be the thrust of their policy from their national conference. If you look at what country has the greatest predominance of a public system vis-a-vis a private system, it would be the national health service in the United Kingdom. That is the sort of system that the Labor Party wants to work towards.

The latest figures on participation rates show that at present 31.6 per cent of Australians have private health insurance. You have to ask: what would be the levels without private health insurance incentives? The premiums would still rise. The insurance funds cannot raise the premiums just to add it on to the bottom line. They have to add it if it is actually contributing to reserves. The point to make is that these fund increases average about eight per cent. During the term of the Labor government the average was 12 per cent. There was a period in 1986-88 when insurance premiums rose by 40 per cent. During that period it was direct Common wealth government decisions relating to the reinsurance pool and the Commonwealth bed day subsidy that contributed to those rises.

What the opposition would like to do is put all of our money into public hospitals. That suggestion will not work because the premiums are going to rise. The premiums are rising due to increasing technology, due to the ageing of the Australian population and due to the fact that there are more people to care for and there are more expensive methods to use. Premiums are going to rise for those reasons.

The funds cannot add the premiums to the bottom line. That is why there is a committee of the Treasurer (Mr Costello), the Minister for Health and Family Services (Dr Wooldridge) and the Prime Minister (Mr Howard) to actually review that. Also, it is important to ask: do the opposition want to scrap these incentives? Will the member for Dobell tell the 13,000 people in his electorate that have taken up the private health insurance incentives that he wants to take it away from them, or will the Leader of the Opposition tell the 12,000 people in Brand that he wants to take away those private health insurance incentives?

Australia has a health system with a public and private component. Most people would agree that you need to efficiently utilise both parts and you also need to offer the community the choice and security that they require in health care. Regarding the policy that the ALP is saying has been a failure, there have been over 1¼ million people in January 1998 who have actually taken up the benefits of the government's incentive scheme. I notice that in Boothby, my own electorate, over 20,000 people have taken up the private health insurance scheme. People who want to apply—some people think it is just a tax rebate—can receive it through the tax system. A lot of pensioners and people on lower incomes, self-funded retirees—I know there are a lot of self-funded retirees on the Central Coast in the member for Dobell's own electorate who are receiving this private health insurance incentive—and other people who are not paying much tax can also receive it by applying through the fund.

There is also the point to make that this has been the carrot but there has also been the stick in the government's policy relating to private health insurance; and that means that single people on incomes above $50,000 and couples on incomes of over $100,000 need to take out private health insurance, otherwise they pay an extra one per cent in the Medicare levy. People need to be aware of that.

Regarding private health insurance, the opposition mentioned the Industry Commission report. The government has already responded to that report; it did so in August. It is important to make private health insurance value for money. Some of the important reforms you could see in private health insurance are just simplified billing. There is an example at the Melbourne Private Hospital where you have simplified billing—and it is paid for by the funds—so that people do not need to receive a bill. That is one of the most common complaints that you get about private health insurance, that people are receiving sometimes up to 60 bills after a stay in a private hospital. If adopted by hospitals, this would allow people either to receive one bill after the hospital stay or, in the case of Melbourne Private Hospital, to have them paid totally by the funds.

The ALP had their conference in January—and we have had the Industry Commission around for a year. What proposals do the ALP have for private health insurance? What is their policy on lifetime community rating? What is their policy on adjusting waiting periods for pre-existing ailments? What is their policy on reviewing the regulations which go around health insurance? What is their policy on looking at the reinsurance pools? What is their policy on enhancing competition between the funds? What is their policy on the role of Medibank Private? What is their policy in areas like integrated billing?

It is important to remember that when Medicare was established by John Deeble it was established to go hand in hand with a strong private sector. When it was established in 1984 private health insurance levels were initially at 66 per cent. They dropped to 50 per cent very quickly after the introduction of Medicare and they have been dropping by about two per cent per year ever since. There were some Labor members who recognised that. Graham Richardson recognised about four or five years ago that there was a real crisis in private health insurance. Unfortunately, most members of the caucus were ideologically opposed to private health insurance and when he left nothing much was done about it.

As I have said before, it was the previous Labor government's directly removing, initially, the rebate for private health insurance when they first got in and the abolition of the Commonwealth bed day subsidy—the removal of the Commonwealth's contribution to the private reinsurance pool—which led to an explosion in premiums of over 40 per cent. Between 1986 and 1988 there was an explosion of 40 per cent. As well as those actions, things like the Medicare rebate, which was reduced from 85 per cent to 75 per cent for in-patient stays, and the 1993 Medicare agreement, which encouraged public patients to be put through in public hospitals, forced private patients into private hospitals. It has been that shift to private patients being treated in private hospitals which has contributed to a lot of the increase in insurance premiums in the 1990s.

There has also been a vicious cycle in private health insurance whereby what you have had is that, as each cycle comes around, the premiums rise and the young, fit and healthy assess their own risk and decide to drop out, which is changing the risk pool of those people who are in private health insurance. This is adverse selection and what it means is that the policy of community rating—whereby you do not discriminate against people who are more likely to claim—is now a farce because it is not even a balanced pool in private health insurance. Adverse selection means that it is actually tilted towards people who are more likely to claim.

One of the problems in the health system is that you have Medicare, which is a universal health system available to all, operating side by side with a private system which has regulations operating on it which are trying to achieve some of the same social objectives as the Medicare system. It is a problem that needs to be addressed. I have never heard the Labor Party come up with a solution to that.

As I mentioned before, Access Economics have estimated that every two per cent drop in private health insurance contributes something like 325,000 hospital bed days. That is two teaching hospitals per year for each two per cent drop per annum. It is often interesting to go back to what previous health ministers have said. Back in August 1996, Graham Richardson said:

As health minister I sponsored a number of measures to stop the drift from private health insurance which was increasing sharply at the time. I steered a package through the cabinet but resigned before I could sell it to the caucus. Practically the whole package died when I left as the Labor Party had always been a bit biased against private health insurance, and without a sponsor any proposal to help the industry was doomed.

One idea I had which had no chance of ever being accepted by my caucus or cabinet colleagues was to charge an increased Medicare levy for high-income earners who refused to take out private health insurance. I was never comfortable with the thought of wealthy people elbowing battlers out of queues in public hospitals.

That is the coalition's policy. Going back a bit earlier, I reviewed the speeches of Dr Blewett while he was health minister. He was Labor's—and the Commonwealth's—longest serving health minister. The abolition of the Commonwealth bed day subsidy back in 1986 was estimated to have directly contributed to a blow-out in private health insurance premiums of 40 per cent. This is what he said in August 1986:

The abolition of the Commonwealth private hospital subsidy is not of itself expected to have a major impact on private health insurance premiums, despite what has been said.

He was wrong. Earlier when the Medicare legislation was being discussed he showed what is, essentially, Labor's view when it comes to private health insurance. He said:

I should emphasise that there will be no need for anyone to take out hospital insurance if they are satisfied with the care provided in public hospitals by doctors employed on a salary or sessional basis by the hospital.

This shows Labor's agenda. Labor would like an NHS type scheme.

It is sometimes a bit contradictory. The current Labor spokesperson for health has conceded that the Australian health care system works best when there is a mix of public and private. He would probably like to see a two-to-one balance; it is not even that now. He has also recognised that whatever difficulties we have in our health care system we are in a better position than many other countries. He has also gone on to say:

. . . before the last election we offered a tax rebate for people with private health insurance . . .

Once again, that is coalition policy. By the end of last year the member for Dobell had committed spending promises in excess of $6 billion. These are unfunded spending promises of $6 billion. He is the big spender of the Australian Labor Party. Here are some examples of his promises. The abolition of therapeutic goods premiums for PBS medicines. Is that Labor Party policy? Do you oppose it? You are silent. Restore savings from forward estimates agreed by the Premiers in 1996—costing $800 million: he opposed it at the time, and presumably he will not reverse it. Restoring funding for the dental health program—$400 million. Are you going to do that one? Support the states' demand for an extra $1.1 billion a year in base funding under the next five-year Medicare agreements. That would be $4½ million. This makes Kim Beazley look quite economical. And what about full indexation of the MBS standard consultation fee for GPs? That is another $160 million. In total it is over $6,000 million. Another policy the ALP has recently come up with has been to say that they will deliver a budget surplus. How? Are you going to produce a costed health policy? (Time expired)


Mr Lee —Mr Deputy Speaker, on a point of order: the honourable member for Boothby at one stage quoted a figure of 12,000 or 13,000 people in my electorate receiving the tax rebate. He was quoting from a document. I ask the honourable member to table the document from which he was quoting.


Dr Southcott —It is confidential. They are private notes.


Mr DEPUTY SPEAKER (Mr Jenkins) —Order! There is no provision in the standing orders requiring an ordinary member of the House to table documents.


Mr Lee —Mr Deputy Speaker, there is an obligation on ministers to table documents that they quote from and the member was standing in for a minister during this MPI debate. The minister has not fronted, so the member has an obligation to table the document the minister gave him.


Mr DEPUTY SPEAKER —Order! There is no point of order. It was a very tenuous connection the honourable member was trying to make.