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Wednesday, 25 November 1998
Page: 579


Mrs IRWIN (10:36 AM) —I rise and state from the start of my speech my opposition to the Private Health Insurance Incentives Bill 1998 that the government brought before us yesterday. It is not that I oppose it simply to oppose; I oppose this legislation because it does nothing for the country except further erode the public health system and hurt the people that rely on it.

The fundamental propositions of the Labor Party are fairness, where all are equal without discrimination; compassion, where we support and protect those who are disadvantaged, oppressed or struggling; responsibility to behave honestly, humanely and fairly; and community, working with all to build a community united, not built on conflict and confrontation. With those propositions in mind we believe government is critical in providing strong leadership and social justice, which are essential in realising the potential of the individual and the community.

Yet sitting on the government benches opposite me are a group of people who are opposed to these propositions if we look at the legislation they are starting to bring before this House. The legislation we are debating before this House is based on an unfair principle that government should not be providing support for universal health care but be ensuring that private commercial operations survive on government funding. This unfeeling, uncaring government has spent the last three years ripping apart the health system of this country, while trying to blame us with excuses that have become mantras rather than facts. Why else would they cut $800 million from the public hospital system, abolish the dental health care program, remove important drugs from the PBS and close Medicare offices?

Since the introduction of Medicare in 1984, universal access to health services has become the accepted means of providing these services. The preference for this system in the electorate is so strong that, in spite of its ideological objections to Medicare, the government would not risk making major changes to the system. Australia has a mixed system of health care delivery with both public and private providers. Private hospitals rely substantially on private health funds, with 48 per cent of the $4.5 billion annually in health funds costs going to patient care in private hospitals. This represented 71 per cent of private hospital revenue in 1996-97.

Private hospitals operate alongside excellent public hospitals. Access is available to all, including privately insured patients. Private hospitals also contract directly with governments for the provision of services and patient care. The Industry Commission's 1997 report saw private health insurance as having two roles: providing top-up funding for additional services and amenities, as well as displacing the need for public funding for services available under Medicare.

This role as a fundraiser for health services is acknowledged by governments, health service providers and also private health insurers. It is this role, that of displacing the need for public funding for services, which represents the key reason for the government introducing this legislation. Put simply, the government argues that, by preserving private health insurance, less public funding will be required to provide health services. The government expects that, through this legislation, with the expenditure of $1.5 billion per year, it will actually save money—a proposition disputed by many involved in this field, not the least of the critics being the Premier of Victoria who has described the 1997 moves by the government as `good money chasing bad'.

In mentioning the sums of money involved in this legislation, it should not be forgotten that the proposal, set at 30 per cent of health fund contributions, actually represents a minimum of $1.5 billion per year for every year into the future this legislation applies. What has happened to choice, free enterprise and competitive markets? This government is so ideologically driven that I am surprised that they would let one industry have any form of subsidy at all. They removed it from the sugar industry, the wool industry, cars and clothes. But, for some reason, newsagents and health insurance are exempt.

It is very strange and somewhat frightening what this government thinks is and is not important to subsidise in the national interest. It hates any taxpayer money subsidising adult migrant English classes, but it will subsidise the wealthy, paying for health care they can afford. There is no sunset clause; there is nothing to control or to cap the amount. This legislation is a blank cheque for at least $1.5 billion per year until this legislation is repealed. This represents a massive funding commitment—a commitment more than the government's Federation Fund each year for what may be many years into the future.

This is not a one-off grant of $1.5 billion; it is that amount and more for each future year—a massive drain on the health allocation from the government's budget. Is it the best way to achieve its aim of maintaining and increasing the level of private health insurance? The experience of the existing rebate suggests that the outcome is not as certain as the government would have us believe.

Yet there have been so many cases of groups seeking government funding that have been refused. This government has steadfastly refused to support the book industry, the shipbuilding industry and the information technology industry. It has refused to stop industries like BHP leaving Newcastle or to stop car makers importing rather than exporting cars.

Why must the government support the private health sector by $1.5 billion, or more, for as long as they deem necessary? Because their health policy is a complete shambles. More importantly, they do not believe in Medicare; they do not believe in universal health care. The Prime Minister has said time and time again how much he believed Medicare was a waste of taxpayers' dollars and that he would dismantle it.

Yesterday the Minister for Health and Aged Care, when asked about funding the dental care program, replied that the reason why it was abolished was that this government knew what was a state and what was a federal responsibility. Well, it is quite obvious to members on this side of the House that the Minister for Health and Aged Care does not believe that health is a federal issue.

Instead, this government sees itself funding an inefficient industry that blames all its woes on Medicare. Private funds are not as efficient in service delivery and cost controls as Medicare. In fact, charges for hospital services are not capped or controlled under the private health schemes, and many consumers still find themselves out of pocket for private health services when they rightly believe that all costs should be covered by their health fund.

The Industry Commission examined the issue of private health insurance. They found that there were reasons for people leaving private health funds that could not be blamed on Medicare. Those reasons included a lack of affordability, poor value for money and a frustration that there was an uninsured gap between what the doctors' fees were and the rebates from Medicare and the private health fund.

What this government should be doing is doing what it has advocated in many other sectors of the economy, and that is reform. It is strange how, given the areas of the economy that are in need of reform, this government remains quiet on the private health sector. The Australian Consumers Association has advocated that the private health providers and doctors need to reform this section of the economy which for some time has used government subsidies to avoid the difficult decisions that it needs to make. Instead of reform, this government is proposing to spend billions of dollars propping up the system. Even the Australian Medical Association has called for reforms in this area, and it is the most conservative of health forums.

The $1.5 billion should be spent where it is needed, not on subsidies. The government has already spent $1.7 billion on subsidies that have been an abject failure. It is a disgrace for government members to stand here in the chamber and blame us for the problems in the private health insurance industry and then throw good money after bad to support it. The problems and the money spent are of the government's making, not the Australian Labor Party's.

The questions of the effectiveness and efficiency of the proposed rebate must be asked as they get to the point of how this massive funding might be better spent. The minister is, I am sure, aware of many competing demands for the health dollar. When considering the outlay of $1.5 billion, it is fair to ask how this money might deliver better health outcomes and if indeed it will result in long-term savings to the health budget.

This bill fails to deliver on key public issues. It is not an effective means of providing health services to the people of Australia. It is not an efficient way of delivering those health services, and it is not an equitable way of providing those services. Let me deal, firstly, with the issue of effectiveness. One assumes that it is intended to increase the level of health fund membership and, as a result, increase the amount available for expenditure on health services. Does the bill result in the provision of additional health services? The first thing you would notice about the proposal is that at the start not one dollar goes to providing additional health services. The rebate goes back into the pockets of people with private health insurance and the money is lost to the health system.

The health fund contributors may spend the money on anything they wish, including a new car, an overseas holiday or even cigarettes. The net effect is that $1.5 billion is taken from the health budget and given to a section of the community to spend on things other than health.

There is, of course, one way in which some of the rebate money can find its way back into the health system. As providers realise that health fund contributors are paying less than they were once prepared to pay, they will increase their fees. The cost of health services to consumers will rise. The effect, though, is that providers will receive more for their services rather than provide additional services.

This bill does absolutely nothing to reduce waiting lists. It does absolutely nothing to provide much needed health services in my electorate of Fowler. This bill fails the test of effectiveness. Do the measures contained in this bill result in a more effective way of funding our health system? It is worth pointing out that, as they stand, our private health insurers do not compare favourably with Medicare as efficient fund raisers and allocators. Administration costs for Medicare are reported as being three per cent of total costs while for private health insurers the rate is 12 per cent.

Private health insurance is already acknowledged as inefficient if we consider that only 88c in the consumer's dollar goes to health compared with 97c in the dollar under Medicare. The proposed rebate is an enor mous discount, a massive 30 per cent. If the intent is to increase or at least maintain the level of funding for health from this source, the number of new contributors would need to be at least sufficient to make up for this discount. The rebate is now limited to new contributors. It is available for all existing contributors as well. For the health system overall to break even, private health insurance would need to rise from the present rate of 30 per cent to around 42 per cent. That is not that far short of the 50 per cent level that existed prior to the introduction of Medicare.

This bill represents a huge gamble on the part of the government. It is betting with over $1.5 billion of taxpayer funds that nearly two million Australians will take up private health fund coverage. If it falls short of that number, its health funding will be a big loser. The shortfall will come from the health budget. To assess the efficiency of the measure, you have to assess the probability that this huge gamble will pay off. You have to assess the likelihood that two million Australians will come flocking back to private health funds. I, for one, do not share the optimism of this government.

I look at typical families in my electorate of Fowler and ask where they would find $1,400 per year to take out private health insurance. These are families who are already struggling to meet their day-to-day commitments. Even if the measures in this bill reduce the amount from around $2,000 per year, I cannot see more than a few taking advantage of the rebate and joining a health fund. While the rebate will no doubt be welcomed by those struggling to maintain private health insurance, I can see few who would suddenly find themselves in a position to take out private health insurance.

This brings me to equity. The median income in the Fowler electorate is $617 per week—$1,400 per year for private health insurance is nearly 4.5 per cent of gross income or three times the Medicare levy. The measures introduced by the government in 1997 providing rebates of up to $450 per year were directed largely at this group—which, I might add, did nothing to increase private health insurance memberships. Significantly, only one in four people with incomes less than $20,000 have private health insurance while three in four with incomes over $70,000 have private health insurance.

As I stated earlier, the funds for this rebate do not go back into the health system but instead into the pockets of contributors, at least in the early stages. This means that rebates of up to $600 per year will go to three out of four with incomes over $70,000 but to only one in four with incomes less than $20,000.

It is worth noting, while on the subject of equity, the two-faced nature of this government. In its 1996 budget the government withdrew from the provision of funds to the states the dental care. As a result, many people in the Fowler electorate have faced long waiting times for dental treatment and the provision of dentures. Many people unable to wait indefinitely have drawn on their life savings—it is disgusting—to get urgently needed dental treatment. These measures, however, provide a rebate for not only basic hospital services but also ancillary services. In fact, $150 is specifically allocated as a rebate for ancillary services.

Ancillary services include dental treatment, not to mention fitness classes, running shoes and Zen meditation in some funds. But what government can be so callous as to withdraw funds for dental treatment for the most needy in our community and then turn around and provide a rebate for dental treatment to those three out of four income earners who earn over $70,000 and who have private health insurance?

There are many other examples of the inequity of the proposals contains in this bill. By any measure, the bill fails the test of equity. But what then are the alternatives to these proposals? At the last election, Labor put forward a policy which would have retained the Private Health Insurance Incentives Scheme as a means tested subsidy for low income earners with private health insurance. But rather than lavish further subsidies on wealthy Australians, Labor would provide $500 million a year to public hospitals to treat more patients. As well, Labor would provide $100 million a year for dental care for pen sioners and low income families. By any standard, these proposals produce far more equitable outcomes. The government's agenda is to return to a two-tiered health system, one where a privileged few enjoy immediate access to the high standards of health care while the rest wait in line for second-class treatment. That was the system that existed throughout the terms of previous Liberal governments. That remains the hidden agenda of this government: undermine the existing system of universal health care by starving it of funds while subsidising the private health care system. This is shameful legislation. It is driven not by the needs of the community but by the misguided agenda of this government. It truly deserves the condemnation, not the support, of this House.