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Monday, 14 March 2005
Page: 62

Senator NETTLE (4:32 PM) —There is no question that the Howard government’s private health insurance policy is a failure. The motion today criticises one component of it: the large rises in private health insurance premiums, well in excess of the consumer price index. The private health insurance industry association says that the rises are being driven by rising costs and demand for new technological interventions, as does Senator Barnett, who has just spoken. The government wants people to retain their private health insurance and it penalises people who do not. When it introduced its private health insurance rebate policy in 1999 the government said that its rebate would take the pressure off premium increases. That has not happened. It also said that the rebate would take the pressure off public hospitals. That has not happened either.

Younger people are abandoning their private health insurance while older people are signing up, which further skews the age profile and has implications for the long-term viability of the industry, which receives, let us remember, $3 billion of public money every year. After four consecutive years of hefty premium increases it is time for the government to accept what most health economists in this country have been saying for years: the private health insurance industry is a black hole. Pouring more scarce health resources into the private health insurance industry is socially and economically irresponsible. With health insurance premiums continuing to rise at this rate, private health insurance becomes even more the domain of the wealthy.

Senator Barnett obviously has not read the research by Richard Denniss of the Australia Institute which was reported in a paper that was released this month. It shows that almost seven in 10 people with incomes over $100,000 per annum have private health insurance whilst only one in four people earning less than $25,000 have private health insurance. The 30 per cent rebate is an enormous transfer of public funds to the well-off. But it is people on low incomes that are suffering the most from ill health. As long as the government funnels more public money into propping up the private health insurance industry it will deprive society of the funds that are desperately needed for essential public health and medical services. The current policy of trying to expand the private health sector and leave a residual public sector as a safety net is unsustainable. Australian National University academic Dr Gwen Gray, in her book entitled The Politics of Medicare, states:

... the health system, as reshaped by the Howard government, cannot work. The combination of Medicare and a large private sector is a highly unstable arrangement which cannot survive. Eventually, the Commonwealth will be forced either to spend even more tax money to subsidise private insurance or to abolish Medicare altogether.

(Time expired)