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Thursday, 15 March 2012
Page: 1925


Senator FAWCETT (South Australia) (17:44): I rise to address briefly the issue of the Fairer Private Health Insurance Incentives Bill 2012 and related bills. Because of the guillotine the government is going to apply the opposition does not have time to address it in the detail we would like, but I have a few key points to make.

It is important as we look at this issue of means testing the private health rebate that we look at the big picture of our health system, and that we take a longer term view. Our health system delivers some of the best health outcomes in the world and Australians are enjoying an increasingly excellent life expectancy. That is partly because of the fact that we have this dual health system, where public hospitals treating the insured can bill insurance companies but can also purchase high-volume private surgery when the waiting lists blow out. The Productivity Commission report of last year indicates that the private system is very competitive, if not far more efficient than the public system. The sustainability of that system in the long term is really important.

It is clear that taxpayers alone cannot carry the load of the future financing of health care in Australia. The budget pressures will increase substantially. Population projections point to a doubling in the proportion of the population aged 65 and over by 2050, and a quadrupling in the proportion of the population aged 85 and over in the same period. What we are seeing there is a huge increase in costs. The second Intergenerational report forecast that expenditures on health will grow from 3.8 per cent of GDP back in 2006-07 to 7.3 per cent of GDP by 2046-47. That means that, more and more, we are going to need to balance the health system between a reliance on the public purse and on individuals playing their part in financing it. That means that the private insurance system must be sustainable, and it will not be sustainable if this government takes measures that mean we reduce the size of the pool of people who are paying into that across their lifetimes.

I turn to touch quickly on the politics of this. The government's approach to this has been divisive at best, and its accusations, for example, that it does not want to see the cleaners in this place pay for the health care of the rich, are crass at worst. The government does not take into account the fact that people on low incomes are not paying for anyone's rebates, because people on low incomes do not pay net tax. Anyone earning less than $820 weekly, or below $900 for families, get more from the government than they pay in tax. The Treasury calls that the net tax threshold. It is also important to realise that this is not the domain of the wealthy. One-third of people who have private health insurance earn less than $32,000, and the median income of people who have private health insurance is only $47,000—hardly the domain of the rich.

There are consequences of the decision that the government is making. Many of my colleagues have talked about the decline that modelling shows will occur. Government figures show that currently some 5.6 million Australians are privately insured. The Deloitte report indicates that some 1.6 million will withdraw from their private hospital cover over a five-year period and 4.3 million will downgrade to lower levels of cover. The most important thing to look at, though, is what is going to happen in the area of allied health, or the extras cover. The Australian Physiotherapy Association said in one of their submissions that they were alarmed at the lack of consideration of ancillary cover in the Treasurer's analysis. They are alarmed for very good reason. For those with extras cover the impact is expected to be greater—nearly one in five, or 18 per cent, will drop their extras altogether, with a further one in three, or 34 per cent, likely to downgrade. Putting the two groups together—those who drop the cover altogether and those who downgrade the extras—shows some 52 per cent will potentially cut back on extras cover, things like dental, optical, physiotherapy, podiatry et cetera.

There are two real impacts from this that this place should be aware of, and that the government should be ashamed that they have not taken into account. I have recently run a number of rural health forums around regional South Australia, and one of the consistent bits of feedback was that the delivery of health services into regional areas, both from GPs and allied health professionals, relies heavily on people being privately insured. Allied health professionals told us that the viability of their businesses depends on people who come to them with private health insurance, and once the businesses cut back—whether that be allied health professionals or private hospitals or the ability to encourage surgeons and other specialists to visit regional areas—we will see a collapse of services in parts of that market. Many people who are there in a private capacity also lend their services to the public system. If the floor on which they base their private practice is removed then we will see those services become unavailable to the public system because the state governments are not funding those services adequately through their hospitals.

There is another area in which this is particularly important. Allied health, which is what extras cover provides, is an important part of preventative health strategy. I met recently with the Podiatry Association, which indicated that Australia has the worst diabetes amputation rate in the industrialised world with 85 Australians losing a foot every week because of diabetes—about one every two hours. Countries that have mainstreamed podiatry and multidisciplinary foot teams have amputation rates 40 to 65 per cent less than Australia's. Guidelines indicate that the 206,000 Australians with diabetes should have an average of four to eight consultations with a podiatrist each year as a preventative measure. Currently, Medicare only funds a total of five allied health consults, which means that many people will only get a Medicare funded podiatry consultation once or twice a year. At the moment, the gap for many people is made up with private health insurance.

The Podiatry Association had a proposal to see the number of Medicare places increased. Given that each amputation costs the health system $100,000 over the life of a patient, they highlighted that by increasing the number of Medicare funded places they would save 167,000 hospital bed days, 3,500 amputations and $400 million each year. If people drop their extras cover, it will reduce their access to podiatrists—and you could probably extend this across other allied health areas,. That means we will not be seeing the same level of preventive health care. The unintended consequence will be that more high cost health care is required in hospitals.

For purely ideological reasons this government is seeking to wind back private health insurance. This will have a flow-on effect not just through pressures on the public hospital system but particularly on regional communities because it undermines the viability of private practice. Perversely, it will increase costs for the government by decreasing people's access to preventive health care. There is much more I could say but, in deference to my colleague who wishes to speak before the government applies the guillotine, I will end by saying I do not support this bill.