Since its introduction in 1959, the Special Account system has been of considerable assistance to health insurance fund contributors whose claims would otherwise have been disallowed under most fund rules regarding long-term, chronic and preexisting illnesses. These rules have necessarily been applied by the funds because of the financial implications for them. The Special Account system has been progressively improved over the years and I have already mentioned a further major improvement to be incorporated in the new medical insurance scheme. This latest measure will, in effect, close the only remaining gap in the Special Account system, so that all contributors will now receive their full medical benefit entitlement and their full hospital benefit entitlement up to the amount of the hospital account, irrespective of chronic illness, the length of stay in hospital or similar circumstances.

However, the Government accepts the Nimmo Committee's view, as reflected by recommendation 25, that it is desirable to devise a simpler system by which the Commonwealth underwrites deficits arising from the payment of benefits in cases of longterm, pre-existing or chronic illnesses. It has therefore been decided that this matter be examined in depth with a view to the development of less complex arrangements under which health insurance funds will receive Commonwealth subsidies approximating the amounts they receive under the present Special Account system. Of course, the new arrangements will in no way reduce the level of benefits now available to contributors under the Special Account system; they will merely provide more effective and less costly administrative machinery for the Commonwealth to provide assistance in this area of health insurance.