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Monday, 30 November 1998
Page: 839

Senator CHRIS EVANS —My question without notice is directed to the Minister representing the Minister for Health and Aged Care, Senator Herron. Minister, can you confirm that the government anticipates that private health insurance premiums will rise four per cent per year? Can the minister also confirm that such an increase would be twice the current inflation rate? Has the minister's attention been drawn to research from the Australian Consumers Association that indicates that much steeper increases have occurred over the past two years? What is the government's estimate for the anticipated increase in private health insurance take-up following the introduction of the proposed 30 per cent rebate if premiums increase by four per cent per year?

Senator HERRON (Aboriginal and Torres Strait Islander Affairs) —I thank Senator Evans for that question. It is another example of the failure of the Labor Party to understand in any way the various parameters that occur in relation to private health care or health care in general in this country. I point out that there are various models put forward and various prognostications given as to what increases might or might not occur. In the whole 13 years that the Labor Party were in power they never predicted it accurately at any stage.

I mentioned the other day the then health minister, Carmen Lawrence, making predictions about how health insurance premiums would come down as a result of the measures that she put in place. In fact, they went up. It is inevitable that health insurance premiums will increase because there is an ageing population, there is new technology coming in, and there is a disproportionate membership of older people in the group carrying private health insurance. As is well known, two-thirds of health care costs are incurred by people over the age of 65. So it is inevitable that premiums will increase given that, as a result of the measures that the Labor Party put in place, we had that precipitous fall from 70 per cent to 35 per cent and the fact that we have a community rating principle whereby the premiums are equal for young people and old people. The four per cent figure has come forward; other figures have come forward.

Senator Faulkner —You don't know.

Senator HERRON —I don't know, Senator Faulkner, what the figure is, nor does anybody else, including you. Madam President, does Senator Faulkner have any idea? The Labor Party has no idea. It is impossible to predict what will occur, because there is a lag period. Dr Lawrence, when she was minister, predicted that it would be a couple of years—Senator Evans is probably not aware of that—before measures that were taken would have an effect in relation to health insurance premiums. So I am not in a position to prognosticate as to what it might be. I would be happy to know whether anybody could actually give an accurate figure.

Senator CHRIS EVANS —Madam President, I ask a supplementary question. Minister, I appreciate your conceding that the premiums will increase, whatever the level of support for private health insurance. You mentioned the question of modelling, which the last part of my question dealt with. Given that you are calling on the parliament, by way of legislation, to invest $1.4 billion of taxpayers' funds into a new scheme, will you table the modelling that the government has done to justify its assumptions and the expenditure of such a large amount of public funds?

Senator HERRON (Aboriginal and Torres Strait Islander Affairs) —I am happy to tell Senator Chris Evans what the modelling is. The government has estimated that the rebate will cost $1.38 billion in the first full year of operation. This figure includes an estimated $380 million for the current scheme. The rebate will not simply increase government expenditure on health. The department has estimated that the cost to the Commonwealth of health services, on average, for every uninsured person is around $1,041, whereas the average cost to the Commonwealth of insured persons is around $628 with the current incentive scheme and $814 with the new rebate. It should be fairly obvious to anybody on the other side that it is beneficial to have people in the private health insurance system because of the difference between $1,041 and $814. That is a $200 difference between those in the public hospital system and those in the private hospital system.