Ms MAY (9:09 PM) —As the federal member for McPherson, an electorate where one in every five persons is 65 years of age or over, I am well aware of the concerns of older Australians, particularly in the area of health. This is why I was very keen to speak on the government's National Health Amendment (Lifetime Health Cover) Bill 1999 and the benefits it will have for people in the McPherson electorate and, indeed, in Australia. From the volume of feedback I have received from my constituents, both in writing and on the telephone, it is clear the right messages are being conveyed to all Australians—the messages that the government is committed to getting the private health insurance industry back on its feet and that the government is determined to arrest the decline in private health insurance membership and ease the burden on public health.

Lifetime Health Cover will end the unfairness of the current system and put in its place a new, workable solution. Under this scheme, registered health funds will be able to set different premiums so that people entering insurance at an early age pay a lower premium throughout their lives relative to those people who join later. It will reward those who take out hospital cover early in life and maintain this cover throughout their life. It encourages Australians under 30 to take on the responsibility of health insurance for life. It is important that younger Australians recognise that health services are expensive but that if they join a health fund early they will not be penalised in the future.

Furthermore, this new approach to private health insurance will provide benefits for older Australians. The scheme is particularly geared to assisting the elderly. No-one aged 65 or over as at 1 July 1999 will pay a higher premium. Those who already have private health insurance will always have the lowest lifetime rating. In other words, they will pay the same rate as someone who joined at age 30. People in this age group will be able to take out hospital cover at any time in the future without paying a loading for joining later in life.

Older constituents in my electorate who have recently dropped private health insurance have told me that this new initiative is a huge incentive. Along with the 30 per cent rebate, many have told me that they will rejoin their private health insurance funds, satisfied that the government is doing what it can to make private health insurance affordable. Those who so elect still have the choice of Medicare. The government is not abandoning Medicare nor taking money away from the public system to pay for the private system. Medicare remains a choice. In fact, the government has increased spending on the public hospital system by 17 per cent through the recently finalised health care agreements.

Another advantage for Australians across the board—and one that particularly concerns thousands of young families in my electorate—is that Lifetime Health Cover will reward long-term members. People who pay health insurance over a long period will be rewarded for their membership loyalty. Currently, without Lifetime Health Cover, people who are long-term members of health funds are subsidising people who join only when they anticipate heavy hospital and medical expenses. This is grossly unfair and pushes up the price of private health insurance for all members.

Under this new approach, people who join after the age of 30 will pay a two per cent premium loading for each year they delay joining. The loading will be capped at a maximum of 70 per cent above the premium payable by a person who joins at age 30. Existing members of health funds who have hospital cover, no matter what their age, will be treated as if they joined a fund by the age of 30. Since I was elected in October last year I have had an increasing number of telephone calls and letters from constituents concerned about rising health insurance costs. In the past few years many have dropped out of their private health insurance funds because of escalating costs. Since the government's announcement of Lifetime Health Cover there has been a noticeable decline in such complaints. This is a positive sign that the government is listening and responding to people's needs.

Another advantage of Lifetime Health Cover is that it will discourage what is known as `hit and run' behaviour—that is when somebody signs up temporarily to a health fund for costly surgery and then leaves the fund immediately after having the operation. On a broader scale, Lifetime Health Cover will stabilise membership numbers and improve the membership profile of health funds. It will also reduce premium increases in the future; this will put more money back into people's pockets, giving people more money for the important things in life such as family commitments and leisure.

The range of private health insurance reforms currently being implemented by the coalition government is designed to stabilise health insurance participation rates. We have known for some time that the private health insurance industry is under pressure. Since the introduction of Medicare in 1985 by Labor, the number of Australians with private health insurance has fallen from approximately 50 per cent to 30 per cent. This drop has created pressures on the industry and substantially increased Medicare costs for the government by increasing the number of public patients. It has also resulted in increases in premiums.

If the current system were to be maintained, the number of Australians with private health insurance would be likely to continue to drop. Increasing the number of public patients would create further pressures on the public health system and substantially increase costs for the government and, ultimately, the Australian taxpayer. Under the current system, in order to survive, health funds would have to continue to increase their premiums, thereby creating a vicious cycle of increasing costs and declining membership. Projections are that, under the current system, premiums would rise faster than they would under Lifetime Health Cover; after five years, the average contribution would be 15 per cent higher under the current system than it would be under Lifetime Health Cover.

The existing system of community rating was designed to ensure access to private health insurance for all members of the community, irrespective of their individual health risks—however, it has a number of major flaws. Over time, Lifetime Health Cover will make health insurance more affordable for all Australians, unlike the existing community rating system. While Lifetime Health Cover is a new scheme, it builds on the government's success in halting the health insurance membership decline which followed the introduction of the 30 per cent rebate; it is another government measure in a series of reforms to improve private health insurance. Other current measures include developing criteria for `no gap' and `known gap' policies and promotion of simplified billing.

In addition to Lifetime Health Cover having the support of the elderly in my electorate, it has been endorsed by industry and consumer groups Australia-wide. The model is supported by all key national groups, including the Consumers Health Forum, the Council on the Ageing and the Australian Consumers Association. Positive comments have been made by the Australian Medical Association, the Australian Private Hospitals Association and the Australian Catholic Health Care Association.

I thoroughly endorse the government's step to provide a grace period of 12 months to ensure that every Australian has the opportunity to take out hospital cover and lock in lower premiums. I would encourage other members of parliament to ensure that their constituents are aware of this grace period so that consumers do not miss out.

Recently, one of my constituents expressed a concern in the case of a person who becomes unemployed and cannot afford to maintain his or her membership. I endorse the move by the government to address such situations. Under Lifetime Health Cover, members may discontinue their private health insurance membership for a period of time for reasons of hardship. This reform allows people up to a total of 24 months absence during their lifetime without a loading being applied to their premium when they return to private health insurance.

In addition, the Lifetime Health Cover scheme will allow those with hospital cover to cease their cover for an aggregated period of 1,094 days without incurring any additional rise in contributions payable and to transfer from one health fund to another while retaining their Lifetime Health Cover entitlements. Lifetime Health Cover will stop hit and run membership. It will cut costs over time, reward long-term members and lead to the stabilising of private health insurance, taking direct pressure off public hospital waiting lists.

Lifetime Health Cover is a long-term measure. It is a reflection of the government wanting to make private health insurance more affordable for Australians now and into the future. It is a policy which will ensure the continuing stability of both the public and private health sectors. This new approach builds on the success of the government's 30 per cent rebate and demonstrates our commitment to long-term solutions, not just quick fixes. Lifetime Health Cover will slow down the rate of premium increases. It will halt the decrease in health insurance membership numbers. Lifetime Health Cover is to be commended to this House.