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Wednesday, 7 March 2001
Page: 25225


Mr GRIFFIN (10:19 AM) —The Health Legislation Amendment Bill (No. 1) 2001 is a retitled version of the Health Legislation Amendment Bill (No. 3) 2000, which earlier this month passed the House of Representatives with amendments moved by the opposition. The main purpose of the bill is to allow private patients in both public and private hospitals to cover the cost of their after-hospital care at home with private health insurance. This bill had been knocking around parliament for about nine months with no sign that the government was giving it any priority. When the bill was considered in the Senate, the government brought forward an amendment at the last moment to deal with an entirely new matter. This amendment is to provide the minister with a new power to reject a proposed increase in premiums sought by a health fund.

Members may not recall the history of this matter so I will refresh your memories. In 1997 when the government introduced the means tested Private Health Insurance Incentives Scheme, the health funds rapidly increased their premiums and managed to swallow the benefit of the scheme for themselves. In the ensuing outcry, the Prime Minister undertook to personally scrutinise all premium increases and to ensure that they would be rejected if they were excessive. The minister assured the public that he stood as guardian of their interests and that he would be tough on the funds. In fact, he never rejected a single increase from that point on. He turned out to be a complete paper tiger, approving a series of increases which averaged twice the rate of inflation from that time until well after the introduction of the 30 per cent rebate. Under the act, the minister already has a number of grounds on which he can reject an application for a premium increase, but he did not use them. What the government is now saying is that the existing grounds are not broad enough to cover simply knocking back a fee increase because the government thinks that it is not justified.

For four years, the minister has been peddling this misconception to the public, presenting himself as their champion defending them from fee increases when in fact he was powerless to act and failed to act through a succession of double and triple inflation increases. The inflationary pressure has temporarily come off the funds after the `run for cover' advertising blackmailed Australians into joining the funds. As a result, we have seen one year with a below CPI increase, and in the current year there will be no increase at all. So now that the funds are in a position where they can temporarily defer increases, the minister has decided that he needs to get some muscle and to look tough.

This is a big turnaround from his position in 1999 when he introduced the Health Legislation Amendment Bill (No. 4) of 1998. The government proposed in schedule 3 of that bill to totally divest responsibility for monitoring of premium increases to the Private Health Insurance Administration Council without any residual power for the minister. If that schedule had been passed, the minister would have lost any power after two years—in other words, in 2001 he would no longer have even a monitoring role on prices. Fortunately, the opposition saved him embarrassment by defeating that ill-conceived amendment in the Senate in early 1999, thereby forcing the minister to keep his responsibility for health fund premiums.

Now, two years later, we find he suddenly needs to increase his powers, not throw them away. Why could this be? Perhaps the answer is provided by the Australian front page story of 5 May last year, which blew the lid off a scheme the minister had cooked up to artificially depress health fund premiums until after the next election. The Australian reported a secret meeting between the minister's former chief of staff, Mr Ken Smith, who lectured the health funds on the need for them to avoid any premium increases between July 2000 and the next election. One of the health funds told the Australian that the message given by Mr Smith was:

The Government has given the industry a boost with the private health rebate and now we want something in return.

In other words, this was a plot not to protect the public interest but to put in place part of the government's re-election strategy. Today it seems we are seeing another step in this plan. The deadline for submission of premium increases for the year 2001 was in February, and it appears the only fund to make such an application was HBF of WA, a fund which enjoys a near monopoly of 70 per cent of the Western Australian market. This increase was hushed up during the WA election campaign and it was only because of a leak to the West Australian that the public was aware that HBF had applied for an increase. This amendment appears to be directed at that application for an increase because the minister wants to ensure that there is no increase this year. I do not know the details of the HBF application, but it should be considered on its merits. The minister cannot be allowed to hush it up for political reasons.

The National Health Act already gives the minister three grounds for rejecting an application for a rule change—if it would:

(a) ... result in a breach of the Act or of a condition of registration of an organisation;

(b) impose an unreasonable or inequitable condition affecting the rights of any contributors; or

(c) might, having regard to the advice of the Council, adversely affect the financial stability of a health benefits fund;

The government amendment currently before the House after being passed by the Senate adds an undefined test of `if the fee increase would be contrary to the public interest'. (Extension of time granted) Now the onus is on the government to explain what sort of fee increase proposal is against the public interest. The government amendment provides that the minister must table a copy of any declaration in the parliament. As a result of Labor's additional amendment passed in the Senate it is now also required to set out the grounds on which the minister formed the opinion that a rise was not in the public interest.

Given that health funds are private companies selling products to the community there should only be pretty limited circumstances where a public interest arises which is not already covered by another provision in this act or the Trade Practices Act. The opposition believes that its amendment ensures that the public will know when a minister has acted using this broad power and the grounds on which such a decision was taken. This is in the best interests of the public and the best interests of the members of funds. It ensures transparency and openness in government decision making, and I understand that the minister is willing to accept this measure. I commend it to the House.

Question resolved in the affirmative.