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Monday, 18 November 2002
Page: 6590


Senator MOORE (2:56 PM) —My question is directed to Senator Patterson, the Minister for Health and Ageing. Can the minister confirm that, from December this year, Medibank Private will cease offering discounts for early payments of between four per cent and six per cent, resulting in additional costs for around 2.7 million Australians who currently benefit from the discount? Doesn't this mean that, together with the premium increases approved by the Howard government earlier this year, some Medibank Private members will be paying up to 22 per cent more for their cover, as of the beginning of the year? How have these changes fulfilled this government's promise leading up to the last election that your policies would `lead to reduced premiums'?


Senator PATTERSON (Minister for Health and Ageing) —Our policies have led to families paying on average $750 less for their private health insurance than they did under Labor. Considering the way in which Mr Smith is indicating that they are going to fiddle with the rebate, I do not presume that their private health insurance will be cheaper under Labor. Let me say that Medibank Private's decision to actually take away the discount for paying ahead of time is a commercial decision. A number of other private health insurance companies have made similar decisions.

I know that Labor sometimes lives in the land of Nod or in cloud-cuckoo-land in terms of economics, but, if you are a company and interest rates are much lower than four per cent or six per cent, it is very difficult to be commercially viable when you offer a discount and cannot actually get that back via investment when people pay ahead of time. Medibank Private made a commercial decision to reduce that discount in order to remain viable, because they made a significant loss last year—I was disappointed with that. In fact, Medibank Private contributed to the loss of private health insurance funds while a number of other funds contributed to an increase in reserves.

Under us, people can move to another private health insurance fund without losing their rights, including their 12-month waiting period—something which was not there under Labor. So people can vote with their feet: if they do not like Medibank Private, they can now go to another health insurance fund that does meet their needs. We are making it easier for them to actually look at the products. Some funds still offer a small discount for paying up-front or using direct debit. People can make that decision without losing their rights—for example, the waiting period. Under Labor that flexibility was not there.

I would advise people that, if they are not happy with Medibank Private, they can actually look at other health funds. What we have done is improve and increase competition to ensure that we get the most efficient private health insurance industry that we possibly can by enabling people to vote with their feet and go to the private health insurance company which delivers the best outcomes for their needs and the best product for their particular needs.


Senator MOORE —Mr President, I ask a supplementary question. Can the minister confirm that the loss to which she referred that was incurred by Medibank Private last financial year was $175.5 million? That is almost $60 for each of the three million Australians covered by Medibank Private. Can she also confirm that in February this year the government approved average premium increases of nine per cent for Medibank Private, resulting in premium increases of $150 to $250 for each of those families? Did the government know of the losses before it approved premium increases for Medibank Private this year?


Senator PATTERSON (Minister for Health and Ageing) —Medibank Private is an enterprise run by a board and by a CEO. The government stands at arm's length from the day-to-day management of Medibank Private. I was concerned by the fact that Medibank Private had made a loss. There have been significant changes in the board, there has been a change of CEO and I believe that in the last two months Medibank Private has begun to turn around. We need to ensure that Medibank Private has sufficient reserves to ensure that it can meet the claims of its members.


Senator Hill —Mr President, I ask that further questions be placed on the Notice Paper.