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HEALTH LEGISLATION AMENDMENT BILL (No. 2) 1999
- Parl No.
- Question No.
Evans, Sen Chris
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- Start of Business
QUESTIONS WITHOUT NOTICE
Goods and Services Tax: Petrol Prices
(Forshaw, Sen Michael, Kemp, Sen Rod)
Crime: New South Wales
(Tierney, Sen John, Vanstone, Sen Amanda)
Goods and Services Tax: Local Government
(Mackay, Sen Sue, Kemp, Sen Rod)
Regional and Rural Australia: Services
(Brownhill, Sen David, Macdonald, Sen Ian)
Goods and Services Tax: Compliance Burden
(Sherry, Sen Nick, Kemp, Sen Rod)
Jabiluka Uranium Mine
(Allison, Sen Lyn, Hill, Sen Robert)
Goods and Services Tax: Cost Reductions
(Quirke, Sen John, Kemp, Sen Rod)
(Ferguson, Sen Alan, Kemp, Sen Rod)
Goods and Services Tax: Pro Bono Legal Services
(Cooney, Sen Barney, Kemp, Sen Rod)
Jabiluka Uranium Mine
(Bartlett, Sen Andrew, Hill, Sen Robert)
Goods and Services Tax: Long-Term Contracts
(Conroy, Sen Stephen, Kemp, Sen Rod)
- Goods and Services Tax: Petrol Prices
ANSWERS TO QUESTIONS WITHOUT NOTICE
- West Papua
- Australian-Indonesian Bilateral Military Forum
- Goods and Services Tax: Fuel Prices
- Jabiluka Uranium Mine
- Superannuation Surcharge
Regulations and Ordinances Committee
- Regulations and Ordinances Committee
- QUESTION TIME
- CONSIDERATION OF LEGISLATION
- PROPOSED INTERNATIONAL AIRPORT: KOORAGANG ISLAND, NEWCASTLE
- Fire Doors
- TAXATION LAWS AMENDMENT BILL (No. 2) 1998
- HEALTH LEGISLATION AMENDMENT BILL (No. 2) 1999
Economics Legislation Committee
- Economics Legislation Committee
A NEW TAX SYSTEM (FRINGE BENEFITS REPORTING) BILL 1998
A NEW TAX SYSTEM (MEDICARE LEVY SURCHARGE—FRINGE BENEFITS) BILL 1998
QUESTIONS ON NOTICE
Federation Cultural and Heritage Projects Program: Funding
(Faulkner, Sen John, Hill, Sen Robert)
Department of Foreign Affairs and Trade: Value of Market Research
(Ray, Sen Robert, Hill, Sen Robert)
Department of Employment, Workplace Relations and Small Business: Contracts with Worthington Di Marzio
(Ray, Sen Robert, Alston, Sen Richard)
Department of Employment, Workplace Relations and Small Business: Contracts with Australasian Research Strategies
(Ray, Sen Robert, Alston, Sen Richard)
Regional Forest Agreements: Logging in Victorian Forest Management Areas
(Brown, Sen Bob, Hill, Sen Robert)
(Brown, Sen Bob, Hill, Sen Robert)
Anderson, Dr Dennis: Chalkbrood Disease Tests
(O'Brien, Sen Kerry, Minchin, Sen Nick)
Multilateral Agreement on Investment
(Brown, Sen Bob, Kemp, Sen Rod)
- Federation Cultural and Heritage Projects Program: Funding
Tuesday, 23 March 1999
Senator CHRIS EVANS (4:57 PM) —The Health Legislation Amendment Bill (No. 2) 1999 represents another measure in the government's ad hoc, confused and sometimes contradictory attempt to prop up the private health insurance industry. What we really need is a holistic and comprehensive approach to addressing the real problems that exist in the private health insurance industry and the real endemic factors that are preventing people from taking up health insurance. What we see again with this bill is that the government has not responded in that holistic and comprehensive way. As a result its approach to this matter really suffers and I do not think we are going to get the sort of public policy response that really is required in this area.
That is not to say that Labor does not support some of the initiatives in the bill, because we do. Some of them are overdue attempts to tackle those underlying issues I referred to that are driving the long-term decline in the number of Australians who are taking out private health insurance. These changes in the bill that I mention are a step in the right direction and should have been made before the introduction of the 30 per cent rebate, because I think that would have been a much better process. Nevertheless, we have to deal with what we have to deal with.
We very vigorously oppose some of the core changes in this bill, particularly those that move to deregulate the control of the price of premiums. We think it is staggering that, at the same time the government has basically purchased 30 per cent of the private health insurance industry in this country by deciding to provide that rebate, we are seeking to remove the minister's powers to regulate premium price increases. We have just bought 30 per cent of the industry. We have decided to prop it up to finance the provision of that industry in this country. At the same time as we put a massive $1.7 billion of public funds into that industry we have a measure proposed today where the government intends to remove its ability to control the premiums, to relinquish control of that part of the industry which we are subsidising. Quite frankly, I find that staggering.
Usually governments seek to have accountability for, and control of, the funds that they invest. Here we have a massive investment in an industry, a measure which the Labor opposition opposed, being followed quite shortly afterwards by a political decision to move out of the effective monitoring of price increases in that industry. At its core it is a very poor decision by the government, and the Labor Party will be opposing and seeking to amend that approach.
It is interesting that the title of the bill has changed, another reflection of the confusion and alterations that are occurring in this area. The bill also does not include the original schedule 6 that was in the bill as originally proposed. It seems that in consulting about the bill the government chose not to consult the Australian Medical Association. The explanatory memorandum for the current bill states under the heading `Consultation':
. . . the key industry associations plus major funds and consumer representatives have been consulted. Those associations are the Australian Private Hospitals Association, Australian Health Insurance Association . . .
The AMA still does not get a mention. I pointed out in Senate estimates that it was excluded in the original bill and the department assured me that there had been some, if only minor, consultation with the AMA. But it is interesting that the AMA is still not listed as being a party which has been consulted.
Clearly, it has been able to have some influence over this bill because schedule 6 is no longer there. Again, this reflects the government's ad hoc and confused approach to this bill and to the problems of the private health insurance industry. That whole schedule was removed after a bit of pressure was put on the minister and cabinet reconsidered the decision and removed that section. That again reflects the fact that there is not a comprehensive, holistic public policy at work here. There is a series of ad hoc, sometimes unconnected, measures that do not really deal in a proper way with the problems that confront private health insurance and private health in this country.
The context of this bill is very important because we have just seen the most massive investment of Commonwealth funds in private industry in the form of the 30 per cent rebate on private health insurance. It is a massive contribution of public money to prop up the private health insurance industry, and now the Senate has been asked to vote for further changes to that industry. So, despite all the claims made about how that particular measure was going to save the private health insurance industry, one suspects that the government now accepts that the rebate is not going to solve the problems of the industry and that much more is needed. In fact, as the early evidence suggests, the private health insurance rebate is not going to do the job that the government promised.
It seems that the government has blind faith in the value of the rebate. But at the recent Senate estimates it was interesting that the department again admitted that no research had been done to determine the possible effectiveness of the 30 per cent rebate among the groups that it was targeted at. So there has been no proper research as to the likely effectiveness of the rebate.
The private health insurance industry provided evidence that the rebate would increase private health insurance membership numbers from the current 30 per cent of the population to 45 per cent of the population. I think that the government, in moving this bill, is signalling that it does not believe that sort of claim. It is recognising that the problems of private health insurance are far more fundamental and that it is going to need a much broader approach to deal with these problems.
It is not clear at this stage how effective the rebate has been in its initial three months of operation. The figures will not be available to us until mid-May. That is when we will get a real assessment of whether or not this massive injection of public funds has done anything to solve what has been a long-term decline in private health insurance membership in this country. The Labor Party has predicted that it will not, and we opposed the bill. I think the early evidence is that the government will not get the sort of response that it had hoped for and that even the government's more modest targets will not be met.
The bill at its core seeks to add deregulation to the government's policy mix of answers for the problems of the private health insurance industry. The main thrust of this bill is to deregulate the private health insurance industry. I understand more bills have been foreshadowed which will further reduce regulation of the private health insurance sector and that we can expect those soon. Central to the regulation of the PHI sector is the maintenance of a community rating that ensures that the risks and costs are spread across groups to ensure that insurance remains affordable to everyone in the community. In this way the private health insurance sector complements the central form of health insurance in Australia; that is, the Medicare system.
Labor supports a number of the measures contained in the bill on the basis that they are beneficial to the entire health system, not just the small part that is the private health insurance sector. While there are clearly problems in the private health insurance sector, for the vast majority of Australians the problems in the health system concern the waiting lists in the public hospitals. This bill will do nothing to reduce those waiting lists. This government is devoting large amounts of money and effort to attempting to reform the private health insurance industry when only 30 per cent of the population is covered by that industry. The amendments proposed by Labor will attempt to overcome the government's blind spot by extending the proposed funding arrangements for approved facilities to Medicare.
Any attempt to reform the health sector, while ignoring the 70 per cent of people who rely on Medicare to provide their health care, will ultimately be inequitable and ineffective. Labor does not support any move to make private health insurance the only route to proper medical treatment. This would lead to a two-tiered system in which those that can afford private health insurance get appropriate health care and everyone else gets what is left over.
In terms of the specific measures in the bill, schedule 3 provides for a process that will remove the government's involvement in the approval of premium increases. As an interim step, the approval of premium increases will be delegated to the Private Health Insurance Administration Council, PHIAC. The bill provides no criteria to guide PHIAC in approving increases nor any requirements to adopt guidelines or publicly explain its decisions. The bill provides no cap on the increases that PHIAC can approve.
The government appears to be shy about the effect of schedule 3. In the second reading speech on the bill, delivered yesterday, the effect of schedule 3 is described in the following terms:
. . . Schedule 3 takes care of [a] few administrative matters allowing for the transfer of the `rates of contribution' rule change provisions from the Minister to the Private Health Insurance Administration Council prior to the repeal of these provisions in the medium term.
As a result of those `few administrative matters' the minister will no longer be responsible for approving private health insurance premium increases. The minister will no longer be responsible.
It was only in 1997 that the Prime Minister took personal responsibility for monitoring and approving those increases in response to public concern about the large increases in private health insurance premiums in this country. At that stage the government was very gung-ho about taking political responsibility and ensuring that the increases were moderate and the funds accountable. Here we are, two years later, and the government wants to slide away from any responsibility. The minister does not want the power to monitor premium increases, he wants to hand it over to PHIAC. What happened to all the political courage about monitoring private health insurance premiums? It is clear that the government does not want to know any longer. They know the premiums will continue to increase. They do not want to wear any political heat, but the real irony is that this is the same government that has just put $1.7 billion into propping up the industry. So they want to prop up the industry but they do not want to wear any of the consequences of or ensure accountability for that public investment. It is an amazing stance to take in terms of effective public policy.
It is important to note that, as a result of the Private Health Insurance Incentives Act 1998, the Commonwealth will fund 30 per cent of any increase approved by the PHIAC. The last stage in deregulating prices in the sector would abolish all control of premium rates and effectively leave prices up to the individual funds. There are no minimum time frames set on the deregulation of premiums. The move to either PHIAC approved increases or the complete deregulation of premiums could be very soon after the bill is enacted. As premiums rise, so will the cost of the rebate provided by the Commonwealth—by Australian taxpayers—drawing more and more resources out of the public health system into propping up the private health insurance system. It is extraordinary that we would make that sort of public policy decision, and the Labor Party will not be supporting it.
Schedule 3 represents the minister's efforts to avoid his responsibility for approving the premiums. It is interesting to note that the minister recently approved a 22 per cent increase in the premiums for the Defence Health Benefits Fund that wiped out any benefits someone in that scheme would have gained under the 30 per cent rebate. The minister is obviously worried that under the current arrangements he will be forced to defend his approval of a number of further premium increases in other health funds later this year. These increases will start the process that Labor warned of: the erosion of the value of the 30 per cent rebate.
In the face of the large increases in premiums over the last few years—the premiums for hospital cover increased 30 per cent between July 1996 and August 1998—this government's solution is to simply deregulate the sector and duck political responsibility on the issue. Labor will be proposing amendments to limit the deregulation of premiums and to specify a minimum period in which any changes are introduced.
Another section of schedule 3 allows the minister to disallow rule changes amongst health funds on the basis that they are against the public interest or against the interests of the private health insurance industry. We have grave concerns about the second of these tests as it could be used to reduce competition or force funds to operate in a political way. Labor will be proposing amendments to delete the second test on which the minister can allow rule changes.
Labor supports the objectives of the bill, which are to make the private health insurance industry more efficient and to encourage the funds to offer more attractive products. The principal measures being proposed to achieve this objective are to permit loyalty discounts for longstanding members and allow discounts for bulk buyers, for example employers. With the safeguards built into the bill, these measures are acceptable to us. Labor will be supporting schedule 1, parts 1 and 2 of the bill.
Labor also agrees that it is unfair on other fund members if some people are allowed to hit-and-run by joining a health fund for a short time for the purposes of obtaining a treatment and then leaving the fund. Labor will be supporting schedule 1, part 3 of the bill.
Labor agrees with the proposal to allow health funds to cover the patient co-payment of pharmaceutical products dispensed within private hospitals where this is done as part of a product that offers no gap coverage. Labor will be supporting schedule 1, part 4 of the bill. This measure is to ensure that patients are not provided with large quantities of drugs prior to being discharged. This would increase the costs borne by the health funds and therefore encourage increases in premiums and the cost of the rebate to the Commonwealth.
The bill also proposes to allow health funds to cover a new facilities benefit for approved facilities that would be chargeable to cover the additional cost of equipment needed to undertake office based surgery in a safe environment. However, the amount covered by the existing Medicare benefits for the procedure will fall from 85 per cent to 75 per cent. The health fund will cover both the 25 per cent gap between Medicare and the schedule fee and the new facilities benefit.
The introduction of the facilities benefit is a significant change, providing for two tiers. Doctors treating privately insured patients will receive the Medicare schedule fee and the facilities benefit. Doctors treating public patients will receive only 85 per cent of the Medicare schedule fee.
If procedures to be carried out in approved facilities are cost effective then it would make sense to provide similar benefits to Medicare recipients to encourage their use of these facilities, that is, Medicare should provide for a rebate equivalent to the facilities benefit that private insured patients are eligible for. Labor will be requesting that the House insert a provision in the bill to this effect.
The proposal for extending health fund coverage to approved facilities does not require them to meet the existing controls on day care facilities. There are no additional resources or powers for the Commonwealth to undertake a monitoring role. There is no provision for states to carry out the inspection and quality control role that they currently carry out in private hospitals and day surgeries. The government needs to spell out what funding and resources it will commit to ensuring that approved facilities will be providing an appropriate standard of care. Labor will be proposing amendments that will require approved facilities to meet the same standards as currently apply to day surgeries under state or territory law.
The opposition is strongly opposed to the proposed deregulation of insurance premium increases and the poorly thought through proposals to create a new class of places for surgery and other procedures to be performed in. It is recognised from the debate in the House that the government intends to proceed with this legislation, so the opposition intends to move some specific measures to make these proposals more workable.
In the committee stage, I will be moving a series of amendments to achieve a range of objectives in that regard. The opposition will also move a request to the House to insert a provision so that the level of benefit payable to a public patient at an approved facility is 85 per cent of the schedule fee plus the facilities fee set by the minister. This will ensure that public hospitals are encouraged to send public patients to these facilities without the patient receiving a gap payment. It will also allow the public sector to achieve the same advantages as this proposal offers the private sector.
The bill, as I said at the outset, represents an admission by the government that a lot more needs to be done than merely throwing money at the problem as they did with the 30 per cent rebate proposal. We have to seriously tackle the issues that are influencing the long-term decline of private health insurance membership in this country. But the government has not done that in a holistic and comprehensive way. There are some measures in this bill which we will be supporting because they do go towards helping to solve some of those problems. But there are a range of other measures which we think represent a step backwards and which we will be opposing.