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Transcript of doorstop interview: Melbourne: 25 February 2011: private health insurance premiums; pharmaceutical benefits; plain packaging of tobacco

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Minister for Health and Ageing


E & OE


NICOLA ROXON: Okay, thank you very much for coming along today. I'm Nicola Roxon, I'm the Federal Health Minister and I've got two important announcements to make today.

One is that the Government is announcing the listing of seven new medicines and vaccines that will be available on the Pharmaceutical Benefits Scheme (PBS) from the 1 April and 1 May. These new drugs are for a range of different

conditions including some very rare blood disorders and severe blood disorders, Parkinson's disease and asthma.

Our Government has also considered and deferred the listings for six medicines for different conditions. In most cases this is where there are existing, or alternative treatments that are already available, or there's no additional clinical

benefit although there may be some other convenient method for taking the medication.

The second important announcement to be made is that today I am announcing that I have approved 34 out of 35 requests for increases to private health insurance premiums.

I need to stress to the public that unlike the system under Mr Abbott this is not a tick and flick process for our Government. In fact I have requested that 17 of the 35 reconsider and resubmit their applications. As a result of that 7.9 million Australians are having a lower increase than they would have under the previous government.

So the average increase, across a very large range of different products for 34 different insurers, is 5.57 per cent. That average increase will take effect from 1 April.

I need to emphasise that this is a lower increase than last year. It's a significantly lower increase than the increase we're seeing in benefits payable by insurers. It's lower than the CPI increases for hospital medical services. And it is lower than the four year average of Mr Abbott's time as the Health Minister, where the tick and flick process applied.

Importantly as well, any Australian who thinks they are not getting good value from their private health insurer is able to now go to a website. All of the information about the average increases is now published and available - a new thing that was introduced in my time as the minister - but also to be able to compare products across different types of benefits that might be needed all on one website and easy for people to access.

You might notice that I've been talking about 34 out of 35 insurers; one insurer, Australian Unity, has declined my request to reduce their premiums, and it's in circumstances where I am not satisfied that they have done all they can to ensure that the increase is the lowest possible.

So I have asked them to reconsider their position. I think again this is evidence that our Government will only approve increases where they are the minimum necessary to ensure that a fund remains viable. And we have done and will

continue to do everything in our power to keep the lowest possible increases, being ones that consumers need to meet.

We understand that families are under pressure and we have made sure that my obligations of assessing these applications in the public interest have been taken very seriously, and a 5.57 per cent increase when you have benefits being paid increasing 7.7 per cent last year, the projections for this year is 9.45. This means that people are getting more and more benefit out of their private health insurance.

And, of course, if anyone feels that they are not, they should go to our website to compare their products with others and see whether they should consider switching if they don't think they're getting a good deal from that insurer.

So over to you. I'm happy to answer any questions.

JOURNALIST: How much was Australian Unity seeking?

NICOLA ROXON: Well because we are still in negotiations with them I'm not able to reveal that. There are commercial in confidence requirements. But you

will see from the table that's been provided there is a different range. That's because each and every individual insurer's application is considered and their circumstances are considered.

So in some instances there's one small insurer where there was a very high increase, but it has viability issues; if it was not approved then we are not convinced it would remain as a viable fund. And we take very detailed advice on those sorts of issues.

In the circumstances of Australian Unity, we have very clear advice that they can offer their consumers a lower increase than they have requested and I am not at this stage approving their application, because I am not convinced they've done all they can to keep the increase at the minimum level.

JOURNALIST: Why is the increase this year a bit lower than last year?

NICOLA ROXON: Well I think that it is because we are continuing to be very strict in the way we approach these applications. We are requiring each fund to provide more evidence of the need to make an increase. We know that when families are under pressure you should not approve any increase which is above what is absolutely required. So a much more rigorous process has been put in place and I think that is having an effect. But obviously we've also kept ongoing pressure on insurers to make sure that their products are attractive to consumers. We've hit an all time high with over 10 million Australians being insured. And I think what we're seeing is insurers looking very closely, if they have to make an increase they're, I think, trying to make sure that they're as

modest as possible and that's why we rigorously assess and every application.

JOURNALIST: In the wake of rising house, electricity prices, the carbon tax today and now insurance premiums, do you think the party's becoming the State of Living Party, because everything just keeps going up lately?

NICOLA ROXON: Well we rigorously assess each and every application that's put in and the announcement that I'm making today is an increase that is lower than it was last year. Last year's was lower than the increase the year before. It's lower than the rate of benefits that are being paid out. And it's lower than Mr Abbott's average record.

When you look at how everything else in the world continues to go up, that's not a bad record for the Government and we've done everything we can to keep these increases to the minimum possible.

When you look around the world and you look at the sorts of events that occur and you look at the importance of having insurance, we want to make sure that the insurance industry is viable. But in making sure that the insurance industry is viable we also have to balance that with the public interest, and we will not

approve an increase, unless we were absolutely clear that it is the minimum that is required to ensure that viability is maintained and consumers get the best possible deal.

JOURNALIST: Can you put a dollar amount on how much for the average premium, how much the average family will be forking out extra?

NICOLA ROXON: Yeah. Look, obviously there are a vast number of different insurance products - around about 20,000 of them. But for an average family, with an average hospital cover, it would be about $150 a year, or just under $3 a week. I need to stress that that is very much an average, because each family will have a different mix of needs, a different type of insurance and a different insurer. And we have done all that we can to assist these as rigorously as possible.

In my time as the Health Minister there's only been one other occasion where we have not approved an application after asking people to reconsider driving their requests and amount down as much as possible. But I think the fact that today we are in a position where we're not convinced that Australian Unity is putting forward the smallest possible increase, is evidence that the system can work, that we are going to be rigorous and I do hope that Australian Unity will reconsider their position.

JOURNALIST: On the PBS, Medicines Australia says this is the first time that a listing has been deferred and the first - you know, you said there's six medicines are being deferred and it's the first time the advice of the PBS is being ignored.

NICOLA ROXON: Well what you're seeing is actually the result of an agreement struck with Medicines Australia, where the pharmaceutical industry was looking for a quicker turnaround of Government considering applications that they've put into the PBS. We've agreed to do that and what that means is unlike in the old days if there were financial pressures or if there were reasons that a Government didn't want to list a medicine, they just deferred considering it in Cabinet, or let it get lost for six or 12 months, to a lot of frustration from the pharmaceutical industry.

We are complying with the terms of the agreement and have brought forward all of those applications. But the Government has to make a decision, especially on every decision that has financial implications, taking account of all of the circumstances, and having done that we've made a decision that a number of medicines won't be listed at this time. We're being public about that. We're making sure that everyone, who is an applicant in the pharmaceutical industry and the consumers, have that information available to them.

And we've given very heavy priority, of course, to any of the medications that are life-saving, to any where there is no alternative that's available for other patients.

And we think that when you have to take account of all other factors and pressures within that health budget and the budget generally, we need to make those priority decisions and that's why we've publicly announced it today.

JOURNALIST: Just on health premiums, given that the cost of living is rising, do you think more people will be starting to move away from health - private health insurance?

NICOLA ROXON: Well what you actually see, figures released on Monday of this week, is an all-time high in the number of Australians that are covered by private health insurance.

More than 10 million have health insurance - 44.8 per cent of the population; the highest number for a long time.

And I think that the key driver for whether people will continue to have private health insurance is private health insurers keeping their increase requests to the minimum and making sure that their members get the benefits that they are

insuring for.

And what you see, when you have a 7.7 per cent increase last year and the benefits paid out, and a projected 9 - nearly 9.5 per cent projected for this year, is that people are making the most of their insurance. They are getting benefits for being insured and that's what will drive keeping people in insurance, or not.

JOURNALIST: Sorry, just on the six deferred medicines. Do you have a time frame for when they will actually be considered again for listing?

NICOLA ROXON: Look, it's not possible for me to give a time frame. I've been very upfront with pharmaceutical companies and with the public. There isn't a time frame that's set on it. When circumstances permit, we will re-assess and

reconsider those applications.

There's no need for a new application to be made to our advisory committee. Their job is to tell us if a drug is effective and cost effective, but they don't have to do the balancing of priorities that, as a Federal Government, we're required to do. So there's no new process that needs to be gone through. We absolutely will consider those deferred items at some point in the future, but I simply can't put a time frame on it.

JOURNALIST: And you said before that with these six there are alternatives.

NICOLA ROXON: Yes. With most of them there are alternatives. There is one that has sought to be listed which is a Botox treatment for a particularly difficult under-arm sweating condition. That, I understand, there are not alternative

treatments for. But for all the others, there are alternative treatments, or alternative ways of being able to get the same clinical benefit.

JOURNALIST: Just on another matter, I believe tobacco companies are making a lot of FOI requests. Why do you think they're doing this? Is this to stall the Health Department perhaps?

NICOLA ROXON: Well big tobacco has made no secret of the fact that they are going to oppose every step that the government takes along its way in its fight against tobacco companies, to try to reduce the smoking rate in this community.

They were opposed to us increasing the excise. They are opposed to plain packaging. They've been opposed to every preventative health message that we try and provide to the public for a product which is a known killer.

The FOI applications, I think, are just another step in a long process that the tobacco company has had a history of doing and, no doubt, will continue to do, of trying to tie up government resources and other resources in the hope of slowing down, or putting off our determination, or reducing our determination to this cause.

That will not be successful. Our Government is absolutely determined to do all we can to reduce the harm of tobacco smoking.

We know there is no safe amount of tobacco that can be consumed. And if any of our steps encourage any person not to take up smoking, or to quit, we will be delighted that this has saved lives into the future and any sort of FOI requests, or other steps that big tobacco want to take, they can try their best, but we are absolutely determined.

JOURNALIST: What do you think of those tactics?

NICOLA ROXON: Well, look, you'll need to ask them. I think it's just another step in a long line of approaches that the tobacco companies have taken to try to stop effective means of reducing the sale of what is a killer product.

We are not going to be frightened off by that. I don't like my department's resources being wasted on these sorts of applications. But ultimately, they are able to do this under the law. I think the public will take dim view of them wasting resources that can be put to far more important causes, but it will not put us off

our determination to make sure we do all we can to reduce the harms caused by tobacco.

Okay, guys. Thanks very much.