Senator Chris Evans asked the Minister for Health and Ageing, upon notice, on 21 August 2003:

(1) In relation to the Minister's press release on 12 February 2003 announcing that private health funds had agreed to phase out gym shoes, tents and golf clubs from the ancillary benefits offered: (a) has the agreement with the Australian Health Insurance Association (AHIA) been secured in writing; if so, can a copy of the agreement be provided; (b) when did the Minister ask the health fund industry to review its products to ensure they funded only items which had a `direct health benefit'; (c) when did the industry first report back to the Minister on the review; and (d) when did industry first notify the Minister that it intended to exclude some items from ancillary tables.

(2) Can a copy be provided of: (a) the letter from the private health industry to the Minister referred to on page 133 of the Community Affairs Legislation Committee Hansard of 13 February 2003; and (b) the code that industry was stated to be developing on ancillary benefits.

(3) Has the code referred to in paragraph (2) received relevant adoption or approval and commenced operation; if so, when.

(4) Has the Australian Competition and Consumer Commission objected to the withdrawal of any benefits for so-called `lifestyles' ancillaries; if so, how is the industry resolving this objection.

(5) Can a copy be provided of the schedule for phasing out each ancillary item that was agreed with the AHIA, showing each item that must cease being offered by all health funds and on what dates these cessations must occur.

(6) Can the Minister confirm that since the agreement with the AHIA was made, all private health insurance funds that offered lifestyle ancillaries have withdrawn them; if not, why not.

(7) In relation to the Minister's estimate that the cost of so-called `lifestyle' ancillary benefits is around $70 million a year, what percentage of this does the Government estimate has been paid for gym shoes, compact discs, tents and golf clubs.

(8) Why has the Government not prohibited funds by law from offering lifestyle ancillary benefits.

(9) In relation to the Minister's request to the health funds to examine all ancillaries to make sure that they have a `direct health benefit', what definition or guidance does the Minister give to health funds to comply with this request.

(10) Are there any products currently offered to Australians by private health insurance funds that the Minister believes do not have a direct health benefit; if so, can a list of these products be provided.

(11) In relation to the benefits listed in paragraph (10): (a) has the Minister requested each of the funds offering them to review them; and (b) when did the Minister make such requests.

Senator Patterson (Minister for Health and Ageing) —The answer to the honourable senator's question is as follows:

(1) (a), (b), (c) & (d), (2) (a) & (b), (3) and (4).

This issue was raised in informal discussions between my Department and the Australian Health Insurance Association (AHIA) towards the end of 2002. The AHIA wrote to me on 7 February 2003, indicating that the Association believed that ancillary benefits should not extend to cover items normally purchased for the purpose of sport, recreation or entertainment. (The letter was tabled at the 13 February 2003 hearing of the Senate Community Affairs Legislation Committee. A copy of the letter is attached.)

The AHIA noted that any action to withdraw benefits would require the approval of the Australian Competition and Consumer Commission (ACCC), and indicated that it would be approaching the ACCC to discuss the most appropriate course of action.

I understand the ACCC indicated that the AHIA would be required to seek authorisation under the Trade Practices Act 1974 to its agreement to remove `lifestyle' benefits. After consideration of the possible time involved in such a process the AHIA wrote to me on 9 May 2003, asking that the Government consider using regulatory powers to require funds to withdraw `lifestyle' benefits.

Following consultation by my Department with the AHIA, I have now imposed an additional condition of registration for all health funds under section 73B of the National Health Act 1953 requiring them to withdraw `lifestyle' benefits by 31 December 2003.

(5) There is no schedule for phasing out each ancillary item. However under the additional conditions of registration referred to in (4) all `lifestyle' ancillary benefits must cease by 31 December 2003.

(6) Some funds withdrew their `lifestyle' benefits before the introduction of the additional conditions of registration as drafted. However, as can be seen in the letter of 7 February 2003, the AHIA believed it should not recommend to member funds that they withdraw `lifestyle' benefits without the approval of the ACCC.

(7) The majority of ancillary benefits paid by funds in 2002-03 were for dental (50%), optical (16%) and physiotherapy (7%) services. These three services alone account for over 73% of ancillary benefits paid by health funds paid in 2002-03.

Lifestyle benefits by comparison are insignificant being less than 1% of all benefits paid by health funds or around 3% of all ancillary benefits paid in 2002-03.

With the data available to my Department it is not possible to break down the Fitness and Lifestyle category into components such as gym shoes, compact discs, tents and golf clubs. However, the Fitness and Lifestyle category also includes benefits paid for services with a strong preventative focus, such as quit smoking courses, weight management programs and programs for the management of chronic illness, such as asthma and diabetes. The additional conditions of registration will allow these latter benefits to be retained where they are part of a fund approved health management program that is intended to address a specific health condition or conditions.

(8) I have taken this step.

(9) The additional condition of registration identifies goods and services, which are primarily for the purpose of sport, recreation or entertainment. However funds can continue to pay benefits in relation to goods or services which are part of a health management program, or in relation to the health management program itself. The health management program must be approved by the organization and intended to prevent or ameliorate a specific health condition or conditions.

(10) and (11) I wrote to the AHIA on 16 September 2003, asking the industry to develop a framework to assess whether a therapy should be covered under ancillary health benefits.