Ms GEORGE (5:45 PM) —The measures outlined in the Health Legislation Amendment (Private Health Insurance Reform) Bill 2003 are not contentious and, as our shadow minister has indicated, have the support of members on this side of the chamber. One can only hope that the provisions will lead to better management practices in the private health industry sector. I am pleased that there will be indicators established for the monitoring of the performance of funds—something that is pretty well nonexistent at the moment—that there will be better mechanisms for investigating and acting on problems identified in the sector and that, very importantly, there will be better treatment for consumers by the provision of additional powers to the Private Health Insurance Ombudsman. Those parts of the bill are not contentious, and I want to concentrate my remarks in this debate in support of the second reading amendment moved by the member for Lalor.

On this side of the chamber, we believe that there are obvious failures in the government's policy position in the area of private health provision. Some of those obvious failures require the urgent attention of the government, and the Labor Party has certainly committed itself to a review of the effectiveness of the now quite considerable outlays to the private health insurance sector. This is an important issue of public policy because the outlays now being provided are over the $2 billion mark, so a quite sizeable contribution of taxpayers' funds is going into that sector. Ultimately, we are all accountable for deciding whether that money is being spent to achieve the best health outcomes in a way that is equitable and fair for all Australians.

We have to ask ourselves whether the nation's citizens are getting the best value and best quality of health care for this huge outlay and through the concessions that come with the 30 per cent rebate. We have to ask, for example, whether that rebate is delivering equitable and efficient outcomes. I think not. I do not think it is as good as it can be at the moment. That is why the shadow minister has indicated that we are involved in an ongoing review of the rebate, but not in the way that the member for Moncrieff pretends would be the outcome. There is no suggestion that we are going to deny people access to private health insurance if that is what they choose. But we are saying that it is a legitimate position to apply our collective minds to whether the outlays being put out there to the sector are having the impact and outcomes that are desirable for all. It is on that issue that we have a different policy approach to that taken by the government. Put simply, you can see that contest of ideas within the parameters of what we believe in: that is, the principle of universal provision funded on the principle of capacity to pay through the taxation system and then, on top of that, for those who choose to take out private insurance, that additional benefit—but not at the expense of the legitimate need for public outlays to provide the best possible public health services.

In contrast to that, and as we have just heard in the statement by the member for Moncrieff, is the emphasis from the other side on private provision, where market choice is supported by government provision and underpinned by the provision of safety nets for those deemed to be decidedly poor. Universality is Labor's way; private provision is really the centrepiece of the government's approach to the provision of health care. Historically, it has been Labor governments that have given effect to the principle of universality. Almost 30 years ago, when we first created Medibank, it was the conservative parties then, as now, who were intent on dismantling and wrecking universality of provision in favour of the centrality of private provision. We first saw it when Mr Fraser was the Prime Minister with his dismantling of Medibank, and now we see it—although not as overtly, but certainly the end result is the same in this government's strategy—in this government's attempts to dismantle Medicare as a universal health system. We see it in the debates in both chambers over bulk-billing becoming more selectively applied and we see it in the introduction of the government's safety net proposals. We consistently argue that safety nets apply when we concede that the main system is flawed and not working. We have seen it in this government's funding cuts to the public hospital system—a substantial cut in the forward estimates to the public hospitals in the last budget of almost $1 billion. Inevitably, we are going down the track of a two-tiered, Americanised system of health care.

What does that Americanised system provide for the average family? At the core of the system in America that the government seem so keen to replicate is the concept of private insurance—if you can afford it or if you are lucky enough to have coverage at your workplace. At the other end is Medicaid, their equivalent of the safety net that we are talking about. Medicaid is a system for the poor, except that in that country that means some 34 million people and `poor' means really poor—in many states Medicaid is provided only to people who are well below the poverty line. In the middle are languishing some 43 million Americans who do not have the capacity or the means to be privately insured. Two-thirds of those who languish in the nether land are people from working families on low to moderate incomes for whom insurance is either unaffordable or unavailable.

That is exactly where this government would have us head, despite the fact that it would be clearly against the interests of the majority of our families and our communities and clearly against what Australians have said very forcibly on numerous occasions: that is, that they wholeheartedly support Medicare and its universal provisions. In my experience and from what I hear from the people I talk to in my electorate, most people take out private health insurance for the sake of personal security, in case they get very ill and when they fear that access to a public hospital may be problematic. However, might not the $2.3 billion spent on the rebate be better allocated in a manner that relieves that insecurity?

At the moment, wealthier people are receiving substantial tax breaks for insurance cover that allows them to access all treatment except emergency hospital treatment more quickly than uninsured families on low incomes can. Of course, there are the low-income families and pensioners in my electorate and elsewhere who scrape together the means to purchase private health insurance for personal security. Yes, the rebate offers indirect financial benefits to families who are struggling to make ends meet and its loss would have some negative impacts for those families, but is the system as it is operating good public policy? Is the $2.3 billion being spent to provide the best health outcomes for all in this nation? I think there are genuine equity considerations at stake. ABS figures show us that 82 per cent of the top fifth income bracket families have private cover while less than 30 per cent of the bottom fifth are insured. Yet all taxpayers—including those who have no insurance, who are on low incomes—are subsidising benefits that are provided by the funds to those who can afford to be covered.

It is ironic that low-income families in my electorate who cannot afford private health insurance—and, indeed, who are often the people languishing on lengthy waiting lists for even basic dental attention—are cross-subsidising people who, up until now, have been able to claim returns on their gym shoes, yoga classes, golf clubs, aromatherapy and iridology. It was only Labor's consistent highlighting and exposure of these rorts that led to a tightening of the rules about concessions for those lifestyle benefits. At the moment the whole community is contributing to private health insurance for the less than half who have private cover.

It is timely that we put this government to the test and examine the arguments that they put forward in support of the $2.3 billion outlay on the private health rebate. The major argument that one hears from the government—and that one has just heard from the member for Moncrieff—goes along these lines: that we provide the rebate so that it will increase the number of Australians holding private health insurance and, as a result of greater numbers with private health insurance, we will take the pressure off the public hospital system. Does that assertion actually stand the test of any rigorous analysis? I believe that if the member for Moncrieff had examined some of the data and analysis he would not have come to the conclusion that it is the rebate that has been the main driver of the increase in private health membership.

Not too long ago there was a study done by the ANU which came to the conclusion that the rebate did initially lift private health coverage, but only by around two percentage points, from 30 to 32.2 per cent—a very marginal outcome for the cost involved. In fact, the study showed that it was the impact of the rather punitive lifetime health cover policy which really was the driver for the increase to what it is at the moment—about 43 per cent in private health funds. It is ironic, because it was the stick not the carrot that did the trick. What got people back into the private health insurance stream was the prospect of being locked into higher premiums if they took out insurance later in life. It was that policy change, the lifetime health cover policy—which in fact cost the government nothing—that drove larger and larger numbers of people into private health insurance.

A recent review commissioned by the government's own health department said it all, in these words:

One could conclude that the government's goal of increasing private health insurance could have been achieved without any spending, let alone the expenditure of the huge amount of taxpayers' money that goes into the private health insurance rebate. One could only imagine what better health outcomes could have been achieved if these funds had been redirected to bolstering our public health system, say, or providing dental care for the half a million Australians who are languishing on waiting lists. So let us not get too carried away with the idea that it is the rebate that has driven the increase in private health fund membership. All the analysis points to the lifetime health cover—the stick—being the driver. Again, I pose the question others have posed: could the increase well have been achieved without the huge outlay that we have seen?

The government's lifetime health cover policy worked initially because it was punitive and coercive, but is it sustainable? As the report mentioned earlier points out, the current analysis shows that there has been in fact some deterioration in the membership profile of funds. The most recent figures, which analyse the period between September 2000 and June 2003, show that the proportion of the population in private funds has remained almost static at 43 per cent, but this masks a downward trend—in younger members exiting health insurance funds. People over 30 are in fact quitting in droves. Over 46,000 of those aged between 30 and 34 have dropped out—a decline of 8.5 per cent. The biggest fall in membership of funds has been in the 35- to 39-year old age group, with nearly 97,000 fewer members. In total, almost a quarter of a million Australians in the 30- to 54-year-old age group have dropped out of private health insurance since September 2000, despite the punitive coercive measures forcing people who do not join to pay higher premiums and the surcharge for those who do not have private coverage. Again I ask the question: is the rebate the driver? Even with a coercive policy, one has to explain why so many people are dropping out of the funds, saying they are not getting value for money.

But the real concern in terms of public policy is that the highest increases in membership growth are occurring in the 65 and over age groups—the people, like those in my electorate, who believe that taking out private health insurance is some form of personal protection. But it becomes a roundabout circle, because the more we rely on those aged 65 and over the more the premiums will rise, as an inevitable consequence, and the more the premiums rise the more people will say, as they do in my electorate, that they are not getting value for money.

The funds at the moment are failing to draw in new members when they turn 30. People aged 30 and over are quitting in droves and those aged 65 and over are accounting for the increases in fund membership. Obviously, older and sicker members will continue to drive up the cost of health insurance, and the more the premiums rise the more the rebate will cost all taxpayers, because there is no cap on it. The funds come along, the premiums increase, and the government is committed to a 30 per cent rebate. So the $2.3 billion outlay is inevitably going to increase. It is already double the figure estimated when the rebate was first introduced. Providing an open-ended cheque to the funds by way of a 30 per cent government subsidy for every premium rise is, in my view, hardly an invitation to the funds to do things better.

The second major argument that has been used by the government to support the rebate is that it would make private health insurance more affordable. Let us examine this assertion, because it is as shaky and flaky as the first. The Prime Minister promised that health insurance would become more affordable and private health insurance would become more attractive across the board, because it would ensure that, as more people joined, the premiums would be driven down. That is another broken promise, because that is not what is occurring. Premiums continue to rise by, on average, around seven per cent to 7½ per cent. Those figures are the on average rises, but many people, including some in my electorate, have had their premiums go up by 15 per cent. On average it is seven per cent, despite the fact that inflation has been around the three per cent mark. So premiums are not coming down; they are going up, and they will continue to rise as more and more people in that 30 to 50 age bracket leave those funds.

On top of that, of course, there is now no justification required for funds to seek an increase, providing it is within the ballpark figure of CPI increases. So the funds do not have to account to government: it is not a political decision that is made; it is just a big tick that comes, providing they are in line with CPI increases. There is an obvious lack of accountability, regulation and monitoring of the funds. The increases do not have to be justified against health outcomes and there is no pressure on those funds to contain their administrative costs. It is no wonder that in a survey I conducted in my electorate 62 per cent of my constituents said they were not receiving value for money from their private health funds.

Finally, the other argument that is used is that all this is going to relieve pressure on the public hospital system. No-one believes that any more. You only have to go to your local public hospital to understand the strains that they are operating under. So in terms of this debate our appeal to the government is not to run a scare campaign but to have a look at the arguments that they have used consistently to bolster a quite sizeable outlay of public funds on the private rebate. Equity and effectiveness have to be key considerations in that review. Good public policy demands no less than that, for ultimately we are accountable for the way we shape our health system and where we direct our financial resources. (Time expired)