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Wednesday, 21 October 2015
Page: 11917


Ms LEY (FarrerMinister for Health, Minister for Sport and Minister for Aged Care) (09:02): I move:

That this bill be now read a second time.

This bill amends the Health Insurance Act 1973 to remove the two existing Medicare safety nets and the Greatest Permissible Gap, and replace them with a new and simpler Medicare safety net.

This bill will result in savings of around $266.7 million over five years.

This amendment will ensure that a strong safety net continues to protect all Australians from high out-of-pocket costs for medical services provided out of hospital. It will also address many of the known equity and complexity issues of the current arrangements.

The current arrangements that assist families with their expenses for medical services include the Extended Medicare Safety Net, the Original Medicare Safety Net and the Greatest Permissible Gap. These arrangements provide additional benefits to individuals and families that have high out-of-pocket costs for out-of-hospital services. The services assisted include GP and specialist attendances and services provided in private clinics and private emergency departments.

Of the three arrangements, the Extended Medicare Safety Net accounts for the majority of the expenditure.

There are a number of problems with the current arrangements which this bill seeks to address.

The current safety nets are complicated and confusing. They all serve the same purpose of assisting patients with out-of-pocket costs for out-of-hospital services. However, they work in different ways and have different thresholds. They interact with each other and can sometimes all be applicable to the same medical service. They are unnecessarily complex and difficult to understand.

The current arrangements are also inconsistent. There is a limit on safety net benefits that will be paid for some but not all out-of-hospital services. Some of these limits are fixed dollar amounts, while others are based on a percentage of the Medicare fee. This inconsistency in arrangements can be very confusing for patients and medical practitioners.

While most doctors charge reasonable fees for their services, some doctors and service providers have used the Extended Medicare Safety Net to underwrite excessive fees. This has led to increased patient out-of-pocket costs in some areas. Evidence of this behaviour was found in two independent reviews of the Extended Medicare Safety Net in 2009 and 2011 which were undertaken by the Centre for Health Economics Research and Evaluation from the University of Technology, Sydney. Both reviews found that the Extended Medicare Safety Net program had the unintended consequence of increasing the fees charged by doctors and that the majority of the benefits available were being paid to people living in high-income areas rather than to people with significant medical conditions. The 2009 review found that for some services, for every dollar spent through the Extended Medicare Safety Net, more than 78c was going to health providers in the form of fee increases, whilst only 22c was assisting patients with their costs. Clearly, this is not an efficient use of government money.

The current arrangements may also support less safe medical practice, such as providing complicated surgical services out of hospital to take advantage of the unlimited rebate available under the Extended Medicare Safety Net.

Many changes have been made to the program to address some of these issues since its introduction in 2004, including increases to eligibility thresholds and capping of safety net benefits. Obstetric services, assisted reproductive technology services and a number of other selected items were capped in 2010 to address excessive fees charged by a small number of service providers. All consultation items, including for GPs and specialists, and a number of other selected items were capped in 2012. More recently, in January 2015, the upper threshold of the Extended Medicare Safety Net was increased to $2,000.

However, these changes have contributed to the complexity of the program and have not addressed all issues. At the moment, medical services are not uniformly capped, which means excessive fee inflation can still occur to services that are uncapped. For example, immediately after the capping of the safety net benefit for a cataract surgery service, the provider fee for an anaesthetic for cataract surgery increased greatly, in some cases by almost 400 per cent. Furthermore, some people reach their threshold almost immediately due to the unlimited amount of out-of-pocket costs that count towards the threshold. This makes the consumer relatively insensitive to the further fees charged, allowing for fee inflation.

The time is right to replace the complex, inefficient Medicare safety net arrangements with a new Medicare safety net. The new Medicare safety net will strengthen the system for patients into the future while contributing to a more sustainable Medicare system. Its design has been informed by the findings of two independent reviews; ongoing consultation with the medical profession since the introduction of the Extended Medicare Safety Net in 2004; and concerns raised by patients.

The new Medicare safety net will continue to provide an additional benefit to families and singles for out-of-hospital Medicare services once an annual threshold has been reached. Unlike the Extended Medicare Safety Net, the amount of out-of-pocket costs per service that count towards the threshold will have a limit, as will the amount of safety net benefits paid per service to qualified people. This will restrict excessive fee inflation by medical providers. These limits are universal, unlike the ad hoc capping arrangements for the Extended Medicare Safety Net. Importantly, although there will be a limit on the accumulation and benefits payable for each individual service, there is no limit to the total safety net benefits that can be paid to a person in a year.

Currently families are able to pool their out-of-pocket costs to reach the safety net threshold sooner. This arrangement will continue and in addition non-concessional singles will have a lower threshold than most non-concessional families. This acknowledges that people who are single and not part of a family are required to meet their health costs on their own, but do not always have access to the significant government support provided to concession card holders.

The thresholds to access the new Medicare safety net will be significantly lower than the current thresholds for the majority of people. More people will receive a safety net benefit than under the current safety net. The new thresholds in 2016 will be $400 per year for singles and families that are concession card holders, $700 for families eligible for family tax benefit part A and non-concessional singles, and $1,000 for non-concessional families.

In response to concerns about the Extended Medicare Safety Net that have been raised by the public, changes have been made to assist families where members are living apart due to ill health, as often occurs in nursing home arrangements. Under the new Medicare safety net, couples who are living apart because of ill health or infirmity will be able to register as a safety net family and pool their out-of-pocket costs to reach the threshold sooner.

The administration arrangements for families where some members are concession card holders and some are not will be streamlined to the benefit of those families. The definition of a dependent will also expand to allow youths aged 16 to 25 who are temporarily unable to study full time due to ill health to be considered part of the safety net family.

In summary, this bill will introduce a new, carefully designed Medicare safety net which will allow the government to continue to support singles and families experiencing high out-of-pocket costs, while streamlining the Medicare safety net arrangements and contributing to the sustainability of Medicare.

I commend the bill to the House.

Debate adjourned.