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Wednesday, 24 August 1983
Page: 177


Dr BLEWETT (Minister for Health) —For the information of honourable members, I present the interim ninth annual report 1982-83 of the Health Insurance Commission and seek leave to make a statement concerning the report.

Leave granted.


Dr BLEWETT —Mr Deputy Speaker, when I announced on 24 May 1983 that the Health Insurance Commission had been chosen to administer the payment of medical benefits under the Medicare program I gave several reasons for that decision. I said:

The Health Insurance Commission already operates Australia's biggest health and medical insurance fund. It is the only organisation with experience in operating an Australia-wide fund and it is generally recognised that the Health Insurance Commission's way of dealing with cash payments is superior . . . with its nationwide network of branches already established the Health Insurance Commission, in operating Medicare, will provide convenient and efficient services for Australians and their families.

The Government will shortly introduce into the Parliament the Medicare package of legislation which will, among other things, give effect to Cabinet's decision to have the Health Insurance Commission pay medical benefits under Medicare. This decision was not taken lightly or without proper consideration of the alternative methods of administration available. There is no doubt that the administration of Medicare by a single organisation with one set of management overheads and one system of claims payment is central to the Medicare concept. The administration of Medicare by one organisation is without doubt the most cost efficient of all the alternatives considered by the Government. Over 60 funds presently handle medical benefits payments. This pluralism has resulted in expensive levels of service to the Australian public and has not facilitated the prompt detection of fraudulent behaviour by a small group of medical providers.

The Government's decision, however, will mean that, after 1 February 1984, the Health Insurance Commission will be able to provide not only a level of service equivalent to that which is now being provided but also a level of service which will in fact be superior and at a lower total administrative cost. The detection of fraud and overservicing which under the previous Government cost the Australian taxpayer untold millions of dollars each year will be made easier. The Health Insurance Commission also has the responsibility for processing direct billing claims made by doctors. A major objective is to reduce the present unacceptably long delays in processing direct billing claims to the point where direct billing claims will be mailed within five working days of receipt.

The Commission's interim ninth annual report for 1982-83 provides further evidence that the Government's confidence in the Health Insurance Commission has not been misplaced. The Government believes that it is appropriate that before the Medicare legislation is adopted, the most detailed and recent report of the Commission's activities be placed before the Parliament. The report shows, beyond doubt, that the Health Insurance Commission is an efficient organisation and on a sound financial footing. The Commission has reported a trading surplus for the year of $18.1m compared with a surplus of $14.5m in the previous year. Its net assets have grown to $58.5m. Its management expenses have fallen to 10 per cent of contribution income-a figure fully comparable with the private sector of the health insurance industry. These matters are shown graphically at pages 4, 8, 14 and 29 of the interim report.

More significantly, in the light of previous criticisms the performance indicators compare very favourably with those of the health insurance industry as a whole. Because of different methods of accounting there has always been some doubt that apples were being compared with apples and pears with pears. The Commission has given a lead in this area, so that a uniform means of performance measurement in the health insurance industry can be developed. I will certainly be taking an interest in further progress of this initiative. This is not the only initiative exhibited by the Commission. In its report last year it invited attention to negotiations it was having with the Private Hospitals Association with a view to paying benefits consistent with the nature of the services and facilities provided by the Hospitals. I am pleased to say that that initiative is being adopted and applied by the Government in its Medicare program.

Mr Deputy Speaker, I should say at this point that, as announced in the Budget Speech by the Treasurer (Mr Keating), the Government has decided that the Health Insurance Commission should repay to the Commonwealth by 30 June 1984 the initial capital of $10m provided for Medibank Private. This decision will, of course, be reflected in the Commission's next annual report. It provides further evidence of the successful nature of the Commission's operations.

The success of the Medicare program will, of course, ultimately be judged by the level of service provided to the Australian community after 1 February 1984. The brief history of the Commission, which commences at page 6 of the report, shows that in a little over a year the world's largest on-line health insurance claims system was designed, developed, tested and implemented and an entirely new computer network was planned and installed. The fruits of that development are seen in the fact that claims for payment by cheque are usually processed on the day of receipt so that in most cases a member would receive a cheque in the mail within three to four days of lodging a claim. The Governmnt fully expects the Health Insurance Commission to be able to bring the Medicare system to the same high level of performance. Mr Deputy Speaker, the ninth interim annual report demonstrates a clear record of achievement by an organisation which can be seen to be efficient, well-motivated, and financially sound. I commend the interim report to the House.