Dr WOOLDRIDGE (Health and Aged Care) (9:52 AM) —I move:

That the bill be now read a second time.

This government is committed to ensuring a balance between public and private health sectors. This balance will ensure Australians have a level of choice as well as universal access to excellent health care. We have demonstrated this commitment through recent reforms to private health insurance, including the introduction of the 30 per cent rebate, loyalty bonuses, promotion of simplified billing and reforms to make the private health insurance industry more responsive and flexible. These reforms are based on a 1997 inquiry into private health insurance conducted by the Industry Commission and extensive consultation with consumer and industry groups. Lifetime Health Cover is another major and important reform arising from this process.

This bill amends the National Health Act 1953 to introduce Lifetime Health Cover into private health insurance. Under Lifetime Health Cover, health funds will be required to set different premiums depending on the age at which a member first takes out hospital cover with a registered health fund. Lifetime Health Cover encourages people to join a fund early in life and to maintain their membership and discourages hit-and-run behaviour. All of this increases the stability of the industry and helps contain the rising cost of health insurance premiums.

Under Lifetime Health Cover, people who take out hospital cover with a registered organisation before the age of 30 and maintain their membership pay lower premiums throughout their lifetime relative to people who delay joining. People who join after the age of 30 will pay a two per cent premium loading for each year they delay joining. This loading is capped at a maximum of 70 per cent above the premium payable by a person who joins at the age of 30. To ensure a fair and equitable transition to Lifetime Health Cover, existing members of private health insurance funds who have hospital cover no matter what their age will be treated as if they had joined a fund at the age of 30. People currently without private health insurance will be given the chance to join and pay the 30-year-old rate irrespective of their age in a 12-month period of grace from 1 July this year to 30 June next year. Special provisions also apply to older Australians. People born before 1 July 1934 can take out hospital cover at any time in the future without paying a loading for joining late in life. If people in this age category choose to join a health fund at any time they will pay the same premium as a 30-year-old new member.

This government recognises that people may need to discontinue their private health insurance membership for a period of time due to, for example, a change in income or an overseas posting. Lifetime Health Cover therefore allows people a 24-month absence from private health insurance without a loading being applied to the premium when they return. An individual who is absent for more than 24 months and then returns to a private health insurance fund will incur a loading of two per cent on top of the premium for every additional 12 months that they were absent from private health insurance.

This bill allows for regulations to be drafted to allow health funds to extend the allowed period of absence for individuals in special circumstances. It also allows for me, as the Minister for Health and Aged Care, to determine that people in exceptional circumstances who were unable to lock into the lower premium rate on 1 July 2000 due to proven hardship are to be given the base rate premium. Determinations of this kind will be made on an individual basis and regulations will specify the circumstances under which such a determination is able to be made.

Lifetime Health Cover complements the major reforms to private health insurance already undertaken by the government. It delivers another important part of the government's commitment to reform the private health insurance industry and to maintain the balance between public and private health sectors. I present the explanatory memorandum to this bill.

Debate (on motion by Ms Macklin) adjourned.