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Thursday, 13 September 2007
Page: 2

Mr ABBOTT (Minister for Health and Ageing) (9:05 AM) —I move:

That this bill be now read a second time.

The Health Legislation Amendment Bill 2007 will amend the Private Health Insurance Act 2007 and the National Health Act 1953.

The amendments to the Private Health Insurance Act 2007 are technical in nature and remedy some unintended consequences. Currently, a broad offence provision may have the unintended effect of penalising insurers who are offering some types of insurance products—for example, accident or disability insurance offered by a general insurer, or insurance cover such as overseas students’ health cover offered by private health insurers. To ensure that no-one is unfairly affected, the bill will narrow this offence provision so that it only covers complying health insurance products that are subject to the private health insurance rebate. The narrowing of this offence provision will be retrospective to 1 April 2007 when the act commenced.

The act currently provides that all the operational rules of a private health insurer are subject to improper discrimination requirements. However, it was only intended that these requirements apply to the core business of private health insurers—that is, complying health insurance products. The bill will provide that the improper discrimination requirements only apply to complying health insurance products.

Private health insurers can offer insurance cover to overseas visitors. The act currently allows private health insurers to offer this cover as part of their core health insurance business. From 1 July 2008, overseas visitors’ health cover is to become a general insurance product, and as such will be able to be offered by both private health and general insurers. In the period from 1 April 2007 to 30 June 2008, these overseas visitors’ health products are subject to other requirements usually only intended to apply to the core business of private health insurers—the offering of complying health insurance products. A transitional provision in this bill provides that private health insurers offering overseas visitors’ health cover will not be subject to the requirements of complying health insurance products. This amendment is proposed so that overseas visitors’ health cover does not have to be offered as a complying health insurance product and there is no offence for not offering this insurance in such a form.

The government’s original intention was to make the Australian Prudential Regulation Authority the regulator for this cover from July 2008. After consultation with APRA and the Private Health Insurance Administration Council, the government has now decided that from July 2008 overseas visitors’ cover offered by private health insurers will be regulated as health related business by the Private Health Insurance Administration Council. Cover provided by general insurers will be regulated as general insurance business by APRA. This parallel approach will remove the potential for regulatory overlap and minimise the compliance burdens on health insurers who now offer the service, while not preventing potential new providers from entering the market. The government will make this arrangement permanent at the next opportunity.

There are special provisions in the act for overseas students’ health cover. These provisions are to encourage private health insurers to enter into a deed with the Commonwealth to ensure that there are sufficient offerings of insurance to overseas students, and some other specified temporary visa holders. Since the act commenced on 1 April 2007, insurers offering overseas students’ and specified temporary visa holders’ health cover have been subject to the Australian Prudential Regulatory Authority and Financial Services Reform Act 2001 requirements. To allow time for private health insurers to become compliant with these new regulatory requirements, the bill provides a period of grace until 1 July 2008.

The amendments to the National Health Act 1953 relate to the Pharmaceutical Benefits Scheme. On 1 August 2007, legislation came into effect which implemented a very significant package of reforms to the Pharmaceutical Benefits Scheme. These reforms put in place structural changes to the pricing of medicines that enable the Australian community to achieve better value from medicines that are already listed on the Pharmaceutical Benefits Scheme, while delivering long-term savings to support future listings of cost-effective medicines.

This bill will correct an unintended narrowing of subsection 103(2A) that occurred during the drafting process of the National Health Amendment (Pharmaceutical Benefits Scheme) Bill 2007. The consequence of this is that pharmacists are now unable to substitute between brands of different pharmaceutical items that are flagged as equivalent in the Pharmaceutical Benefits Scheme Schedule, a practice that was provided for prior to the amendments. Narrowing this provision was not the intention of the reform legislation and the bill will restore the original intention of this provision. The bill also makes a number of consequential amendments to the act as a result of the correction of that provision.

The amendments in this bill rectify this unintended narrowing of meaning. The bill is another part of the continuing job of careful government, and I commend it to the House.

Debate (on motion by Ms Plibersek) adjourned.