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Monday, 12 November 1973
Page: 3159


Mr WILLIS (Gellibrand) - In the course of my address I hope to show the concern the previous Government had for the low income earner. The honourable member for Griffith (Mr Donald Cameron) told us that the previous Government had the concern of the low income earner at heart, but an analysis of the existing health scheme would show how little regard it had for such people. The proposed health insurance program of this Government represents the most extensive reform in financing health services in the history of this country. Health services constitute one of the most technically complex and financially expensive areas of activity in any advanced country. In this country, they are long overdue for examination and overhaul. The Government's health insurance program will provide this overhaul.

In looking at .the financial aspects ' of this scheme, we see, firstly, that health costs at the moment are of the order of $2,000m a year. This is an extraordinarily large amount of money. In fact, it represents something like 5.3 per cent of the gross domestic product. In other words, something like $5 out of every $100 of income produced in this country is being expended on health services.

Costs as a percentage of gross domestic products have been increasing and if they continue in their present spiral they will represent 12 per cent of gross domestic product by the end of this century. So we are talking of an area in which the Government has an extraordinary responsibility to ensure that expenditure of this importance is appropriately allocated. It is the Government's role to allocate resources efficiently, and it must certainly be concerned with efficiently allocating this area of resources, which represents such a large proportion of our expenditure.

The current health insurance scheme is inefficient, inequitable and inadequate. It is inefficient because there are so many funds; there are over 90 hospital and medical insurance funds. They are administratively inefficient. There are so many of them that they cannot possibly have the economy of scale that one large fund would have. They necessarily waste funds in competing with each other through advertising. They advertise in competition for contributors, which is a waste of money in terms of the benefits that could be obtained from one basic fund. They have been guilty of wasting money on lavish buildings and they have undoubtedly held large amounts of funds in excessive reserves. The Nimmo Committee recommended that their reserves needed to be no more than 3 months contributions. Some funds have been holding reserves of up to 2 years contributions. This is an extraordinary waste of contributors' money.

The current scheme is inequitable because the poorer a contributor is the more his contributions cost; and conversely, the richer a contributor is, the less his contributions cost. This is an extraordinary inequity in the very heart of the health insurance scheme. This occurs through the tax deduction system. Because the marginal tax rate is higher under a progressive tax system, contributions become less expensive the richer the contributor is. Let me give a quick example by taking 2 extreme levels. With taxable incomes of over $40,000 a year, the marginal tax rate is about 67c in the $1. For $100 spent on contributions to a health insurance fund, a taxpayer in this category would save $67 that he otherwise would have to pay in tax. making the net cost to him for hospital and medical cover the sum of $33. A person in receipt of the minimum wage would have a higher marginal tax rate of 15c in the $1. This means that, instead of spending on hospital and medical insurance he would have to pay $85 after receiving a taxation rebate of $15. It will be seen that the after tax cost becomes less and less as the income becomes higher. This absurd inequity shows the total disregard that the previous Government had for low income earners in relation to health schemes. Our scheme will totally alter that situation, as I shall show in a moment.

The current scheme is also totally inadequate in that it does not cover everybody. The honourable member for Boothby knows this, although he refused to acknowledge it in this House. Only 86.5 per cent of the population of this country are covered by a health insurance scheme. This includes pensioners. In other words, 13 i per cent of the population are not covered by a health insurance scheme or any other scheme of assistance. This is established by a Commonwealth Bureau of Statistics report, reference No. 17.7 entitled Persons Covered by Hospital and Medical Expenditure Assistance Schemes, August 1972' and issued on 31 May 1973. If honourable members opposite want to know the facts they should stagger into the Library and get a copy of it. They will find, as I have said, that only 86.5 per cent of the population of Australia are covered by health schemes; in other words, 13.5 per cent are not covered. This includes the State of Queensland. Queensland is a special example, in that the people of Queensland are. entitled to free public ward hospital treatment and are free of the means test for this purpose.

Mr McLeay- That was introduced by Mr Bjelke-Petersen.


Mr WILLIS - It was not introduced by him. If one excludes Queensland, one finds that 89.9 per cent of the people outside

Queensland are not covered. In other words, one in every ten is not covered. This is an extraordinarily high proportion. It means that the current system is hopeless in the way in which it sets out to cover the people of Australia. Of course, there are subsidised medical benefit schemes which cover 4 per cent of the number of people they are supposed to cover. It is an absolute scheme, a total farce, and it must be changed.

The Government's proposed health insurance program will overcome these deficiencies. The basic level of health care will be provided efficiently, equitably and fully. It will be efficient because there will be only one fund to provide the basic cover for medical and hospital costs. This will have considerable advantages in administrative efficiency compared with the present system under which 90 or more funds compete to provide some services. It will be equitable because of the 1.35 per cent levy. It will mean that the higher a contributor's income, the more he will pay, up to a level of $150 per annum. This is infinitely better than the current system, which is quite the reverse. Currently, the richer a contributor is, the less his contributions cost him. We shall change that completely, and so we should if we are concerned with equity.

The proposed scheme will be adequate in that it will cover the whole population. There will be not a 86.5 per cent cover, but a 100 per cent cover. In other words, there will not be a large section of the population at risk, so to speak, faced with the disaster of large hospital and medical costs if any member of the family falls ill. The total cost of our scheme will be about the same as the present scheme but it will be raised more equitably and spent more equitably.

It is clear from what I have said that the criteria that underlie this scheme are efficiency and equity. These are the concerns of economists; so it is appropriate that this scheme was devised by economists. One of the absurd arguments of the Australian Medical Association and others was that this scheme was basically achieved by economists, not doctors. What they say is that Dr Scotton and Dr Deeble are doctors of philosophy, not doctors of medicine, and they ask what they would know about medicine. Here we are talking about the funding of an insurance system, not about how to conduct appendectomies, tonsillectomies or hysterectomies. We are talking of the allocation of resources, which is an area for economists. It has nothing to do with the conduct of medical operations or how to make medical diagnoses.

The source of funds will be a levy of 1.35 per cent on taxable income, not on gross income. There will be a related contribution from Consolidated Revenue and also a levy on workers' compensation and third party motor insurance premiums. The 1.35 per cent levy will be paid in the same way as income tax; in other words, it will be deducted weekly or fortnightly. It will be shown as a separate amount on pay slips. So taxpayers will know that they are contributing to a health scheme that costs money and they will know exactly what they are paying. Where taxable incomes are $1,040 or less no income tax is payable now and no levy will be payable either. Aged persons have taxation rebates, which means that they pay no tax on taxable incomes below $1,920 per annum. They will not have to pay the levy either. Pensioners with pensioner medical service entitlements will not have to pay the levy. Low income families will be protected. A man on the minimum wage and with a wife and one child to maintain will not have to pay anything. With more children, the amount that he can earn and still not pay any levy will go up. A man with 2 children will be able to earn $64.50 and pay no levy; a man with 6 children will be able to earn $82.10 and pay no levy. This will be adjusted with increases in the minimum wage. This means that the scheme being put forward by the Government will be much cheaper for most of the population. I have not had time to go through particular examples, but it is true to say that three out of four families will be better off under the scheme and seven out of ten single people will be better off.

The DEPUTY CHAIRMAN (Mr Luchetti) - Order! The honourable member's time has expired.







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