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Monday, 14 March 2005
Page: 22


Senator McLUCAS (2:01 PM) —My question is to Senator Patterson, the Minister representing the Minister for Health and Ageing. In light of three consecutive annual premium rises of up to eight per cent, can the minister explain to the Senate why the private health insurance system in this country should be seen as sustainable?


Senator PATTERSON (Minister for Family and Community Services and Minister Assisting the Prime Minister for Women’s Issues) —It is an interesting question that Senator McLucas puts to me. It pays to have been around here for a while. I remember, when Labor was in government, that private health insurance providers could put up their fees at any time—and did, sometimes three and four times a year. From memory, I would say it was by over 10 per cent on average in most years. On average, I think it was 11 per cent. In one year alone, private health insurance went up 17 per cent. I remember former Senator Richardson sitting right here—maybe in this seat—and saying that the level that private health insurance membership was at or about to get to under Labor was unsustainable. Senator McLucas was not here then, so she may not remember that. But those of us who took out private health insurance and have had it for a long time remember very clearly private health insurance going up under Labor at a rate of between 10 and 11 per cent a year and, in one year alone, by 17 per cent.

Private health insurance premiums will rise by an average of 7.96 per cent this year. Most funds will increase premiums from 1 April. If you take an average across the last six years we have been in government, it is nowhere near the increases under Labor. I am not going to join in a discussion about individual funds, but the health insurance premiums have not been rubber-stamped. The government, through the Private Health Insurance Administration Council and the Department of Health and Ageing, scrutinises all the applications for increases carefully. The Australian Government Actuary has also been asked to give a second opinion on some funds, and further advice has been sought in one case from the actuary before the proposed premium increase was allowed.

Nobody wants increases in prices in private health insurance, but they are necessary in order to ensure that the funds stay viable. All of us know that there is more and more occurring in terms of provision of services and the type of surgery that can be done, and we have had a debate here about prostheses used. These all put pressure on private health insurance. The minister was satisfied that rate increases sought by the health funds should not be disallowed because, in all cases, they were no more than required to meet the expected payments to members and to maintain capital adequacy.

It is important to remember that the average increases are across all products. Some premiums will increase by less than the average; others will increase by more. In the coming weeks, funds will advise their members how premiums will be affected. As I said before, the cost of health care is rising, largely due to increasing technology and rising wages, which I did not mention before, including rising wages of other health professionals. It is unrealistic to think that private health insurance can be isolated from price increases, particularly where the nation expects better and better benefits from the latest technologies.

Private health insurance still provides peace of mind for nine million Australians who are covered. In 2003-04, one fund paid almost $300,000 for a single member claim. Few families could afford this expense without the benefit of private health cover. We are committed—I do not know what Labor’s position is; it has had various positions on this—to the 30 per cent rebate on private health insurance and the higher rebates for older Australians, which ensure that private health insurance remains affordable and sustainable.


Senator McLUCAS —Mr President, I ask a supplementary question. In relation to the sustainability of the private health insurance system—and I remind the minister of the intent of the first question—does the minister recall the following statement from the Liberal Party’s 2001 election policy:

The discouraging of ‘hit and run’ membership of health funds will lead to reduced premiums over time and to the stabilisation of the private health insurance industry ...

How does the minister explain the recent declines in membership for those aged under 45 and in particular those aged between 30 and 44 and children aged between five and 14? Doesn’t this suggest that families are struggling to maintain their private health insurance in the light of ever-increasing premiums, and won’t these continuing trends cast increasing doubt on the long-term sustainability of the system?


Senator PATTERSON (Minister for Family and Community Services and Minister Assisting the Prime Minister for Women’s Issues) —I would rather stand our record on private health insurance up against Labor’s record any day—a record of an over 10 per cent increase per annum, while in one year alone it was 17 per cent; a record where we saw numbers at a point where even the then minister said it was unsustainable. We have seen more people and more families in work and able to pay their private health insurance, a 30 per cent rebate that Labor has never said it would support and increased assistance to older people. They are the measures we are using. Just recently we put through a bill to ensure that we could contain the costs of some of the prostheses covered by private health insurance. It contained measures to make this sustainable. It is unrealistic to expect that private health insurance prices will not increase, but they increased more under Labor every year, on average, than they have ever increased under us.