Senator CHRIS EVANS (7:45 PM) —by leave—I move:

(8) Schedule 1, item 11, page 5 (line 11), omit the formula, substitute:

((Age—Prior member years)—30) x 2% x Base rate

(9) Schedule 1, item 11, page 5 (after line 24), after the definition of base rate , insert:

prior member years is the number of whole years between the day the adult beneficiary turned 30 and 1 July 1999 during which he or she held private hospital cover which provided cover (in whole or in part) for liability to pay fees and charges in respect of some or all hospital treatment provided to a patient by a hospital or a day hospital facility.

(10) Schedule 1, item 11, page 5 (line 26), after "2000", insert "and therefore has no prior member years".

(11) Schedule 1, item 11, page 5 (line 29), omit the example formula, substitute:

((35—0)—30) x 2% x $1,000 = $100

(12) Schedule 1, item 11, page 5 (after line 29), at the end of clause 1, add:

Example 2: Mary turned 39 years of age on 2 November 2001. She had private health insurance in respect of hospital treatment between 1990 and 30 December 1998. She turned 30 on 2 November 1992 and therefore has 6 prior member years. She takes out hospital cover again on 1 December 2001. If that hospital cover has a base rate of $1,000 per year, the amount of the increase in the base rate under this clause is as follows:

((39—6)—30) x 2% x $1,000 = $60

(13) Schedule 1, item 11, page 5 (after line 29), at the end of clause 1, add:

Note: An adult beneficiary's prior member years may be determined by the Health Insurance Ombudsman. See section 82ZTDA.

These amendments deal with the question of recognition of prior membership. People currently without health insurance but who have had it for many years in the past will get credit for their past membership and pay a lesser penalty premium. The example given in the Senate minority report is of a person three years out of health insurance after the introduction of Lifetime Health Cover but who had previously been a member for six years. That person would pay a penalty of $60 compared to $180 under the government's proposal. The whole purpose of Lifetime Health Cover is to give recognition for prior membership. But the government has refused to do this for those long-term members who happen not to be members on the day that Lifetime Health Cover comes into effect. We think, in certain circumstances, individuals will be treated harshly and unfairly by the absence of such a provision.

The argument that this reasonable recognition of prior membership cannot be given because the funds do not have records of prior membership is, we think, laughable. If the funds are so disorganised that they do not have any records of past membership then perhaps they are in a worse state of affairs than we thought. Many older Australians will be bitterly disappointed that their loyalty to a fund will have no reward and that they will be treated harshly in comparison to members who join today. Many of these people will have had stressful personal circumstances which will have led them to the decision to resign their membership.

Given that we are about rewarding people for their loyalty and persistence in paying their membership, we think it is a hole in the approach to exclude those people, when this scheme is introduced, who have had past membership. They may have had no knowledge that the scheme was to be introduced so they would have had no ability to take that into account in determining their behaviour. We think it would be better if the scheme had some measure that sought to give them some credit, to bring them into the net. We think the scheme will be improved by such a provision.