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Tuesday, 20 March 2007
Page: 82


Senator SCULLION (Minister for Community Services) (5:50 PM) —The Private Health Insurance Bill 2006 and the related bills comprehensively deliver on the government’s commitment to bring about the next wave of innovation in private health care. The legislation, which is due to come into effect on 1 April, does two distinct things: firstly, it facilitates increased innovation and choice in private health care; and, secondly, it clarifies and simplifies the regulatory framework. These changes are consistent with the government’s commitment to a vibrant private health sector, but that is not an end in itself. Rather, it gives consumers choice and peace of mind in their health care. It also complements the public health system, which is underwritten by the universality of Medicare. The government has an ongoing and very strong commitment to Medicare. This legislation does not weaken that commitment in any way.

The bills give effect to the reforms announced on 26 April 2006 to: allow insurers to provide and include in risk equalisations benefits for out-of-hospital services under broader health cover, require insurers to provide standard product information to help people compare policies and understand entitlements, eliminate lifetime health cover penalties for those who have retained their hospital cover for 10 years continuously and provide a framework for the quality and safety of services covered by private health insurance. Broader health cover is the key change that will affect private health services. Hospital cover will expand to cover out-of-hospital services that substitute for or prevent treatment within a hospital. This is an important innovation that will transform chronic care management. It removes the barrier to the development of flexible products that better reflect clinical practice and better meet consumer needs.

The bills also consolidate the regulatory framework into one primary piece of legislation. The current system of regulation through conditions of registration is replaced by a transparent set of product standards. This will result in much clearer and simpler regulation of private health insurers and service providers. The government has continued to work closely with health insurers and service providers since the legislation was first introduced in December to improve the clarity and operation of the legislation. The government amendments that will be circulated shortly are the result of these ongoing consultations. They will help ensure that the various elements of the policy work as they are intended to.

The Senate Standing Committee on Community Affairs has also just finished scrutinising the bills. Following its review of submissions from interested stakeholders and a public hearing, the committee concluded that it supports the measures in the bills. We will be making some refinements in implementing the new framework to reflect the committee’s constructive suggestions. Most of the recommendations have been taken on board in an appropriate form. I should note here that in relation to the committee’s recommendations we will, after further consultation, incorporate the recommended care plan charter, a set of guidelines to assist in the relationship of services provided under broader health cover to those provided under Medicare in the statutory rules to ensure that they have legislative force as disallowable instruments.

While the legislation generally has been received positively, some incorrect claims have been made about what the package will or will not actually do. It is important now to put some points on the public record to assist in the understanding and interpretation of the legislation. First and foremost, broader health cover, which is the centrepiece reform element, will not disadvantage those Australians who do not have private health insurance. Broader health cover is about giving health insurers the legal framework to pay for clinically appropriate treatment wherever that is provided. It is not about creating a new set of services that only the privately insured will be able to access. Privately insured patients will now be able to have their treatments more conveniently in local clinics or more comfortably in their own homes, instead of having to go to hospital. It may come as a surprise to some, but in fact such arrangements have been commonplace in state run public hospitals since the 1980s.

Broader health cover will allow the private sector to follow the lead of the public sector in designing and delivering outreach services. There are many examples of outreach services already provided by the public sector. Broader health cover arrangements therefore will not disadvantage public patients. All Australians will continue to have equal access to hospital treatment as public patients and access to the wide range of treatments available under Medicare. We are doing nothing that stops states pursuing similar innovations of their own in relation to public patients; nor do the Australian health care agreements throw barriers in the way of states who wish to fund out of hospital patient services.

Secondly, related to the introduction of broader health cover, claims have been made that it will lead to further increases in private health insurance premiums over time. Broader health cover arrangements are not expected to increase pressure on premiums. They will provide cover for community based treatment as an alternative to treatment within a hospital setting. In essence, broader health cover will replace hospitalisation with care in other settings where it is clinically appropriate and convenient for consumers. This replacement means that broader health cover has some scope to reduce hospital costs and out-of-pocket expenses for consumers, which means over time downward pressure on premiums. The government is keen for consumers to be able to access broader health cover products. However, it will be a commercial decision for private health insurers in choosing whether to offer broader health cover.

Thirdly, it has been suggested that the legislation pays scant attention to quality and safety issues. The main bill introduces the first comprehensive safety and quality regime for all privately insured services, to take effect from 1 July 2008. This start date allows sufficient time for service providers to take a considered approach to the level of accreditation required and to get accredited. The timing allows the accreditation industry to spread its workload, rather than creating a huge administrative bottleneck. It will avoid current available accreditation arrangements potentially determining the shape of what is to come. It will also allow insurers time to develop and negotiate effective and quality based contracts for broader health cover with providers including, but not solely, medical practitioners and private hospital interests. The 1 July 2008 start date for the quality and safety regime has attracted undue attention. It is important to understand that insurers will continue to exercise care on behalf of their members as they do now in choosing who will deliver services. The public expects it and this government expects it.

Indeed, taking into account issues that emerged through the Senate committee inquiry, we will be incorporating provisions in the statutory rules to provide that there must be no diminution of existing quality and safety standards and regimes where they apply to services and providers operating under a care plan facilitated by an insurer. Where accreditation is now usual for such services in other contexts, it will be expected for relevant care plan services. These will be interim and transitional measures pending the commencement of the new dedicated accreditation regime.

Fourthly, elements of the medical profession have raised concerns about the issue of clinical freedom and whether the new private health insurance framework provides sufficient safeguards for it. The government wants to make very clear that clinical freedom—that is, the right of medical practitioners to make unfettered clinical choices—is very important. Decisions about clinical care are and will remain matters for patients and their doctors. There is nothing in the bills that gives insurers more influence over clinical choices.

The new legislation provides the same level of protection for clinical freedom as the current National Health Act. Furthermore, the government are unaware of any complaints from doctors about interference from health insurers under the current regime. If there are demonstrated grounds to review this in the future we will monitor implementation very carefully but, without hard evidence, it is not appropriate to act in a heavy-handed way. Conversely, however, it is up to health insurers to keep faith with medical practitioners and other providers, to reassure them and the public that patients will always get the care they need. The government have every confidence in them and are sure that their trust in the industry will be justified under this new framework.

Finally, concerns have been raised by the opposition about a change to the Private Health Insurance Administration Council’s objectives. The council is the prudential regulator of the private health insurance industry, although, through the administration of standards, the council ensures that health insurers have sufficient money to pay benefits to their members. Nothing will change. The council does not and never has had any power to minimise the level of private health insurance premiums. Control over premiums resides wholly and solely with the Minister for Health and Ageing, and it always has. The new legislation reflects this. The minister’s job is to ensure that premiums are kept as low as possible and that a fund’s obligations to its members and its prudential requirements around minimum reserves are always met.

The government are concerned that, as far as possible, we ensure these major reforms are introduced and implemented smoothly. I therefore foreshadow that the government will monitor the initial month of operation and are prepared to address specific difficulties that may arise in the spring sittings, with legislative adjustments as necessary. I am happy to give a similar undertaking on behalf of the government in respect of the operation of the statutory rules and regulations made under this legislation. I commend this legislation to the Senate.

Question negatived.