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Wednesday, 27 May 1987
Page: 3442


Mr HODGES(6.21) —At the outset of this debate on the Health Legislation Amendment Bill 1987 I want to refute some of the statements made by the honourable member for Eden-Monaro (Mr Snow). It is interesting that the Australian Bureau of Statistics survey of 1986, which shows the income breakdown of contributor units with health insurance, reveals that many people on low incomes in this nation do have hospital insurance. These are the people who will pay more as a result of the changes contained in this Bill. If the honourable member for Eden-Monaro does not appreciate the fact that tens of thousands of pensioners and people on low incomes in this nation have private health insurance, he ought to visit some of the areas of his electorate in which there are large concentrations of pensioners, as I have in my electorate. Indeed, he ought to talk to some of the younger people in the community. He would find that it is not just the rich, the affluent, in our community who have private health insurance. Let me cite the figures that the Australian Bureau of Statistics has produced. There are 268,000 people in this country who have an income of less than $126 per week. There are 90,600 people who have an income of between $126 and $150. There are 444,900 people who have an income of between $151 and $250 per week, and there are 603,600 people who have an income of $251 to $350 a week. That is a clear indication that hundreds of thousands of Australians carry private health insurance. It is not just carried by the affluent in our society.

In addressing specific aspects of this Bill I want to refer to four areas. Firstly, the community rating principle is being slowly eroded and destroyed. Secondly, I want to look at the advantages enjoyed by Medibank Private over the other private health insurance funds. Thirdly, I want to look at how the average Australian family is affected by increased health costs under the Hawke socialist Government. Finally, I want to look at the burgeoning cost of Medicare and the folly of bulk billing that is encouraged by the Minister for Health (Dr Blewett). In regard to the community rating principle, I noted in the 1985-86 report of the Health Insurance Commission that one of the corporate goals of Medibank is that it should adhere to the principle of community rating. What is happening in this country is that the healthy, and the young healthy, are being creamed off. The good risks in our community-the young healthy people-are being lured away into some of the new funds that are being registered, thereby creating great difficulties for some of the older funds which are carrying the poor risks. These new funds are offering lower rates, but are avoiding the patients with pre-existing illnesses, the higher risk patients. These people are discouraged from changing to the lower rates being offered by the new companies. Patients are forced to wait 12 months before benefits are paid if they change from their existing fund to a new fund.

The community rating principle of having the high risk patients offset by the lower risk patients is slowly but surely being eroded. The Minister should allow patients with pre-existing illnesses to transfer from one fund to another without a waiting period. This would tend to sort out some of the more attractive rates that are being offered by the newer funds. Medibank Private, in my view, is guilty of creaming off some of the better risks. People seeking Medicare payouts in many instances attend Medibank Private offices, because they are dual offices.

Medibank Private, through Medicare, has the profiles of patients. It knows which patients are the better risks and it has no problem in snaring those better risks. I know that there is supposed to be a manual issued to Medibank Private and Medicare offices which deplores this practice. But it is my understanding that quite a bit of this practice goes on. Is it any wonder that Medibank Private, with 264 outlets-or almost the equivalent thereof because of the dual offices throughout the nation-is the largest fund in Australia? Patients receive cash rebates at Medicare counters. They are prime targets to be joined up by Medibank Private's hospital insurance fund. I suggest to the Minister for Health that he investigate this issue as a matter of urgency, because I believe that we will see a rapid deterioration in community rating if something is not done. It is a matter of urgency.

Let me refer to an advertisement in the Melbourne Age of Wednesday, 1 April 1987 for a firm called Health Australia which is endeavouring to attract people to its fund. It states: `Compare Health Australia's weekly rates for top Hospital and Ancillary cover'. It lists HBA Ltd at $22.68, ANA Friendly Society at $22.30, Manchester Unity at $21.42, IOOF Friendly Society at $24.60 and Health Australia at $17.80. Is it any wonder that some of the older funds which are carrying the high risk patients that I mentioned earlier are losing the better risks, thus helping to destroy the community rating principle?

I turn to the advantages that Medibank Private has over other private health insurance funds. I referred a little earlier to the fact that it shares offices with Medicare. Medicare-Medibank has 264 offices with 4,600 staff Australia-wide. They are in prominent positions in many instances. If those offices are not in prominent positions, there is no problem as there is no shortage of money. It can close the office that has lower public exposure and open one with greater public exposure. It acts as a one-stop shopping spot for people. One in every four Australians enters Medicare offices for cash claims. It is on that basis that the Medibank Private staff are able to snare some of those people.

The private health insurance funds should be agents for Medicare. This would improve the service to the public and it would break the monopoly of Medibank Private. Surely, any government would want to improve the position of the general public by allowing more outlets. The Voluntary Health Insurance Association of Australia, the VHIAA, has made numerous approaches to the Government to have Medicare operate through its agencies, but the answer from the Minister for Health has been a firm no. Medicare management expenses are low because the Australian Taxation Office acts as a collector for it. What does the Tax Office charge the Health Insurance Commission for collecting the $1.6 billion raised through Medicare? My understanding is that there is no charge made on Medicare for that collection.

If we look at the audit fees for Medibank Private and Medicare we find that in 1982-83 Medibank Private paid $142,000 to the Auditor-General. I remind the House that in 1982-83 there was no Medicare. In 1985-86 it paid $44,350. The remainder, about $250,000, was charged to Medicare. The Health Insurance Commission commissioners received fees of $53,723 in 1982-83. Again I remind the House that there was no Medicare then. In 1985-86 Medibank Private paid $9,088 to its commissioners while Medicare was charged the extra $51,000-odd. How does the Minister explain these circumstances? The advantages to Medibank Private are obvious. Medibank Private and Medicare are obviously cooking the books.

Let me turn to the Auditor-General's comments on the Health Insurance Commission annual report for 1985-86. He said that Medibank Private has so many unfair advantages over the private funds. It is causing hardship to these other funds. I would suggest to the Parliament that eventually it may send some of those smaller funds broke. The Auditor-General is very disturbed about this, but the unusual aspect of it is the fact that in the 1984-85 report he made some of the same comments as he made in the 1985-86 report, and yet the Health Insurance Commission seems to ignore them. I wonder when the Government is going to take some action on this.

An election has been announced for 11 July and I am quite confident that the Howard Government will be able to investigate these matters. Let us listen to some of the comments that the Auditor-General has made. He mentioned the apportionment of expenditure between functions; that the commissioners breached sub- sections 34C (2) and 35 (5) of the Act in that the Commission retrospectively employed cost apportionment principles for 1985-86 contrary to those determined by the Minister for Health. He went on in that particular section of his report to criticise the Health Insurance Commission. The Health Insurance Commission has made provisions under Medibank Private for superannuation. There is an amount of $2 million that the Auditor-General says should be written back to the operating statement as an operating surplus available for appropriation. The specific item on public liability was mentioned in 1984-85 by the Auditor-General, yet it appears again in this 1985-86 report. A similar situation exists with building maintenance and workers compensation. The Commission has employed a lot of questionable accounting methods. In other words, in plain words it has been cooking the books to the advantage of Medibank Private. When we are in government there is no doubt in my mind that Medibank Private will be put on a privatised basis. There seems to be no reason why the Health Insurance Commission should operate as a statutory authority of the Commonwealth Government as it does with a distinct advantage.

The average family has been fleeced of extra money for health care in the last 12 months. The Medicare tax-that is what it is; it is not a levy but a tax-was one per cent and it is now 1.25 per cent, an increase of 25 per cent. So a family with a taxable income of $20,000 paid $200 annually in the Medicare tax. That same family now pays $250, an increase of $50. The maximum gap for service between the benefit and the schedule fee has increased from $10 to $20. The limit on total gap payments remains the same, at $150 per person per annum. This is a difficult figure to quantify and it will vary from family to family. A five-member family could well incur an extra $100 annually. Pharmaceuticals have increased from $5 per item to a maximum of $10 per item. If and when a family reaches the 25-prescription limit in a year, all further items are provided at no charge for the remainder of that year. Again this is difficult to quantify in individual family terms, but the Government is going to save $67 million annually, and in my estimation the average extra cost for a five-person family will be about $20 annually.

The private health insurance basic hospital cover has risen since June last year. We note here that Medibank Private is much more competitive-is it any wonder that it is?-than the private health funds because it enjoys all of those advantages that I mentioned earlier. In New South Wales the approximate average increase in private health insurance cover has been about $96 in the last 12 months. In Victoria it has gone up by $58 and in Queensland by $65. Most of these increases in premiums can be attributed to the abolition of the Commonwealth private hospital bed day subsidy. This latest change reducing the professional services to patients, in a hospital or day hospital from 85 to 75 per cent of the schedule fee, is saving the Government $105m and placing the extra cost burden on the private health insurance funds, which must pay the gap of the insured. This will result in insurance premium increases of about 75c weekly or about $39 annually. If we look at the total extra direct health costs of the average family as a result of the actions of the Hawke Government, we find that in New South Wales the average family is paying annually an extra $305, in Victoria an extra $267 and in Queensland an extra $274.

Finally I want to deal with the overall burgeoning cost of Medicare. It has been a disaster financially for this Government and it always will be because of the way it is structured and the way it operates.


Mr Ian Robinson —And for the people.


Mr HODGES —And for the people. That is what it amounts to, as the honourable member for Page says. It is the people who finally pay. In this particular instance the Minister, in introducing Medicare, which came into operation on 1 February 1984, made the comment that the one per cent levy would substantially fund the whole Medicare program. Three years later we have the Medicare tax at 1.25 per cent. It is raising $1.64 billion. Yet Medicare is costing $4.7 billion. The extra money is coming out of Consolidated Revenue. But what is worse is the fact that the public cannot get the service that Medicare is supposed to provide. The fact that other than perhaps in my own State of Queensland, where we have had a so-called-and I emphasise `so-called'-free hospital scheme for about three or four decades, people cannot have elective surgery is, quite frankly, a disgraceful state of affairs for which the Hawke Government deserves to be condemned. There are about 100,000 people on waiting lists for operations. Only acute conditions can be handled. We were told by the Prime Minister (Mr Hawke), in one of the misleading statements that he made in the 1983 election campaign, and he made more of them in the 1984 campaign-he will not fool the Australian people for the election coming up on 11 July-`A bed will be available for you in a public hospital. All Australians will have beds available in public hospitals'. At that time 60 per cent of Australians had private health insurance cover for their hospitalisation. With the introduction of Medicare that dropped to about 47 per cent. But since then many people have shown good sense, and the figure is now over 50 per cent. They have realised the folly and the misleading statements that were made then by the Prime Minister. They cannot get hospitalisation when they want it. Except perhaps in my State of Queensland, elective surgery is a thing of the past.

One or two hours earlier in this House the Prime Minister announced that there would be an election on 11 July. I am staggered by the hypocrisy that he displayed when he mentioned that there would be a double dissolution. One of the reasons he gave for the double dissolution was that we-that is, the Opposition plus the Australian Democrats in the Senate-had blocked his Australia Card legislation, while the Government and the Minister for Health have encouraged bulk billing. Entrepreneurial medicine right around Australia is an absolute disgrace. Entrepreneurial medicine is running rampant in Australia and it ought to be stopped. Bulk billing should be restricted to pensioners and to the disadvantaged. Look at the direct billing figure. It was 44.9 per cent for five months of the 1983-84 financial year. It rose to 45.2 per cent in 1984-85, and it has gone up 3.4 per cent to 48.5 per cent in the last financial year. It ought to be abolished.


Mr DEPUTY SPEAKER (Mr Leo McLeay) —Order! The honourable member's time has expired.