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Wednesday, 25 November 1998
Page: 587

Ms ELLIS (11:16 AM) —Members in this place are faced with a very stark choice in this debate: a choice between improving Australia's public hospitals for all Australians or subsidising the private health insurance industry and therefore affecting the status of a few. Labor believes that strengthening the Medicare system is the best way to improve the nation's health system. The Liberal government is arguing that $1.5 billion needs to be spent propping up the failing, ailing private health insurance system.

Labor remains committed to universal access to publicly funded health services through Medicare and will ensure resources are allocated fairly on the basis of medical need, not the ability to pay. Labor introduced Medicare because we believe in a universal health system of hospitals, doctors and medicines for all Australians. We believe in a system of public hospitals relied upon by all Australians, because even those with private health insurance use public hospitals for emergency and complex care when the need arises, despite any private health insurance they may have.

However, Labor recognises also that private health insurance plays an important role in Australia's health system. We believe that making private health insurance better value and hence more attractive to the consumer depends upon a cooperative approach between health funds, hospitals, doctors and government. The reality is that, while these groups continue their conflict, insurance premiums will continue to rise, causing patients to face massive gaps and fund memberships to fall. Governments must continue to work at all levels with the three major groups—in fact, all groups—to make private health insurance better value.

If we are going to talk about the reactions of people within electorates, when you speak to people in my electorate there is absolutely no doubt that those who have private health insurance maintain it with the wish, the hope and the dream that the gap problem will be addressed. That is their problem. Their problem is the cost but there is also the inequity that, after paying out all the money for private health insurance, we face these inevitable gaps that then have to be paid.

Making private health insurance better value for consumers must be that public policy goal. For most low and middle income Australians, private health insurance simply does not provide that value for money. Consumers are therefore voting with their feet and moving out. Many people I have spoken to tell me that, should they have an income high enough, they would rather not pay any insurance, take their luck, invest the equivalent amount of money and pay the bills as they come along, purely because they pay out an enormous amount in insurance premiums. If they are unfortunate enough to need acute care of any kind, they then get, at the end of that process, a very large bill. It is just not equitable to them.

The question is: why are they really moving with their feet? The answer is that, while the quality of the insurance product continues to erode, as I have said, the premiums continue to rise at a rate above inflation. In the eight years from April 1989 to July 1997, the consumer price index increased by almost 30 per cent while private health insurance premiums increased by a whopping 100 per cent in the same period. This is the government's second attempt to address the decline in private health insurance. Their first attempt last term, the centrepiece of the coalition's 1996 health policy, the Private Health Insurance Incentives Scheme, was an altogether and collectively totalled $1.7 billion attempt to reduce premiums and increase membership. The scheme has been a disaster.

Three rounds of increases have pushed up premiums by more than 20 per cent. Health fund membership is at its lowest level ever—30.3 per cent, well below the government's target of 35.5 per cent. However, instead of admitting the failure of the first scheme, the government is throwing good money after bad with this 30 per cent rebate, a rebate that is not means tested and not expected by anyone to have any effect on the decline in membership.

The greatest beneficiaries of the government's proposed scheme will be families earning more than $70,000—families who are not rich but they are on $70,000—70 per cent of whom already have private health insurance. Families earning less than $30,000, only 30 per cent of whom have private insurance, and everybody else derive nowhere near the same benefit.

It is important for the Australian public to understand that, under the government's scheme, half of this rebate will go to 20 per cent of Australian taxpayers with the highest level of incomes. The true effect of the policy will be to deliver a majority of high income earners a massive subsidy for something they already have while offering lower income families a subsidy for something they cannot really afford.

I ask the minister and the Prime Minister what they will do if private health insurance companies raise their premiums to swallow yet another benefit, as did happen in the last parliament. We all saw it. The Prime Minister stood in this very place and said, `I will absolutely personally okay every premium rise by a private insurance company in health from hereon in.' The $600 million rebate came in. Within days, we had increases in premiums.

The government may have the best of intentions in directing this $1.5 billion subsidy to Australian families, but economic reality dictates that it is a handout to private health insurance companies, who will undoubtedly raise their premiums. As I have said, it happened last time. What is the guarantee it will not occur again?

The private health funds should not be in receipt of such a massive subsidisation. It is a disgrace that the government's solution to the decline in the number of Australians using private health insurance is to reward the blatant `rent seeking' behaviour of the insurance companies. All the rhetoric from this government about its sound economic policy comes to nothing when you look at the range of handouts it gives to prop up those `rent seekers'. One wonders how the pointy headed economists on the other side of the House could possibly justify this policy.

So limited is the government's approach to this problem that they refuse to look at ways to address the real problem—that is, finding ways of encouraging the private health funds to actually improve their product. There is no guarantee in this legislation at all that health funds will lift their game by controlling costs and resolving the problem of out-of-pocket costs to patients—again, the gap. Funds, doctors and hospitals must negotiate to reduce the cost of insurance, particularly those medical gaps. They will be less likely to do this if they continue to receive handouts like the government's billion dollar handout in this instance.

I think it is important to correct the misconception that the private health system itself is in crisis. Private hospitals do not necessarily need to be linked to the failing insurance funds. The Australian Consumers Association were spot on in their 29 October report on the government's rebate policy when they said:

What is . . . in decline is the private funding system, a $500 million bureaucratic financial intermediary which currently adds little value in delivering health care.

Public policy should clearly distinguish between the health funding system, which should be based predominantly on Medicare, and the health delivery system, which should be as competitive as possible.

One of the government's major claims for this legislation is that it will ease the pressure on the public health system. This assertion, I do not believe, is backed up sufficiently by the facts. In the first year, the coalition's subsidy proposal allocates just over $1 billion, rising to $1.36 billion by 2001-02. This would be enough for most existing members but would not cover any new members. As a result, it would be expected that there would be little increase in private sector treatment on top of what would otherwise be provided to existing members.

In other words, there would be little or no reduction in demand for public health services. Waiting times for surgery in public hospitals would continue to grow. Here in Canberra, for instance, we have seen waiting lists for elective surgery at Canberra Hospital increase by 20 per cent since April this year alone. That is on top of the ACT government probably correctly boasting of one of the best Medicare agreement financial arrangements in the country. We got a windfall of money, yet it seems that our waiting lists continue to grow. It is a dilemma. Fixing the public hospital system should be the government's highest priority because it is where the greatest need exists. Government should spend money directly on treating patients. It has to be the most effective way to reduce waiting lists.

There can be no justification for the general extension of rebate to the ancillary services area. This has nothing to do with relieving pressure on public hospitals. One point that is interesting to note, and accurately reflects the ideology and priorities of this conservative government, is that privately insured people will get a rebate of 30 per cent on their dental premiums. That is terrific for them. This means that nearly $200 million of the rebate will go to subsidising dental treatment—two years after this government scrapped the $100 million Commonwealth dental scheme that gave dental treatment to pensioners and those in need in our community. That really sticks with me. That is one of the most disgusting elements of this particular piece of legislation. It shows the government up for what it really is.

I have to admit to being puzzled by the government's reasoning for proposing this legislation. The government and their supporters in this debate have made assertions that the rebate will help arrest the slide in private health insurance membership and take pressure off the public health system but have offered no evidence, none at all, to back up that assertion. When they introduced their incentives scheme, the Prime Minister and Minister Wooldridge claimed that the subsidy of up to $450 a year for low and middle income earners would lift membership rates back towards 40 per cent of the population. In fact, coverage has continued to slide. On all the available evidence, I do not believe that the government's rebate proposal will generate a long-term increase in private health insurance cover, nor will it reduce pressure on the public health system.

In conclusion, I am to some point fascinated by the element of the debate coming from the other side that we on this side should all be aware and, in fact, scared of the number of people in our electorates who may or may not have private insurance. For the record, from my point of view, I do not believe the Australian public are stupid, as others on the other side assert. They understand that the harsh economic reality they are facing is an overpriced private health insurance system, a system which offers them an enormous monetary gap at the end of treatment.

They also understand very well that, give or take private health insurance, should the crisis occur, should the medical demand be there, they end up in a well-equipped, hopefully well-serviced, well-staffed public hospital system, regardless of their financial circumstances. They really do understand that a fistful of dollars, though attractive in the short term, will do nothing at all to assist them in their aspirations for a good public health system, as we all, them included, believe we need. I do not think the fistful of dollars approach is a very fair or articulate way to refer to those people in any electorate, be it mine or any electorate.

At the end of the day the people, the customers, the consumers of private health insurance, really do understand what is happening here—they really do. They know that $1.5 billion is probably the biggest, most expensive finger to be placed in any hole in any dike in any crisis that this government has ever confronted.

I really urge those on the other side to get serious and flip away this silly, cheap way of referring to people in specific electorates who may or may not have health insurance. Look at this problem for what it really is. If you cannot guarantee increased membership of private health insurance funds, if you cannot guarantee the shortening of lists for public hospital queues, if you cannot guarantee that people will no longer be lying on trolleys in corridors in public hospitals, this is bad public policy—and you need to put those guarantees in it, or you need to drop it.