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Wednesday, 4 March 1970

Mr HAYDEN (Oxley) - The Minister for Health (Dr Forbes) has had almost 55 minutes in which to discuss the Government's proposed approach to restructuring the health insurance scheme in some areas. I will be given 20 minutes - possibly 30 minutes, if granted an extension of time. I leave it to fair minded people to judge the reasonableness of such a practice. Secondly, I hope that the fact that the Minister has gone to a great deal of trouble in order to express to the House in a general way, not a specific way, proposed changes to the health insurance scheme will not encourage him to indulge in lengthy delay before- amendments are introduced. Quite clearly there is need for urgent reform in quite a number of areas of the health insurance scheme.

Let me get on to the proposals the Minister has been mentioning. It is quite clear that his speech is a public confession of the Government's humiliation on health insurance. He has retreated a considerable distance - in fact, a long way - from the position he frequently upheld until the last election, namely, of asserting the excellence of the scheme as it currently operates. One should be quite clear that his present proposals are not radical reforms; they are rather mild proposals. They mainly revolve around the Nimmo Committee report and recommendations. Let me say two things about the Nimmo report and the way the Minister has used it. It does not represent the acme of what should be done in the field of health insurance in this country.

The Committee was carefully manacled by restrictive terms of reference to prevent it from making any radical recommendations. The Government asserted within its terms of reference that the Committee had to bring down findings that fitted into the present structure of health insurance. It could not exceed those. It could not go out and experiment and investigate the appropriateness, efficiency and general desirability of the sort of propositions the Labor Party has been recommending^ So, the first point is that the Nimmo report represents a restricted view - restricted by Government fear - of health insurance in this country.

The next point is that in any event the Government has not handled all of the recommendations of the Nimmo Committee. Indeed, it has neglected the keystone of the recommendations in the report; that is, regionalisation of the activities of the open funds. That has been completely neglected by the Minister, who rejects any suggestion that the Government should introduce this practice. I will come back to it because, as 1 repeat, it is the keystone of the operation of all the recommendations of the Nimmo Committee.

Let me work my way through some of the points the Minister made. The first one I want to raise relates to protection for low income earners. Under the Government's proposals a family man earning $42.50 a week and supporting a wife will receive full protection under the health insurance scheme. I cannot see the equity of that approach when a man supporting a wife and five children and earning $48.75 a week will have to meet the full cost of the scheme himself if he wishes to insure. He is 25c outside the adjusted scale which the Minister proposes and which would allow him to meet two-thirds of the cost of insurance. This is a completely wrong approach to the way in which subsidised protection or completely free protection for low income earners should be provided.

The Melbourne Survey of poverty clearly showed that a number of people in the low income area have grave problems in meeting the cost of health insurance. The more dependants they have, the graver this problem becomes. Accordingly, that survey established an income level that proceeded on a sliding scale, and in any event, the level was only 40% of what the survey team regarded as a minimum standard of living for people in the community. That means to say that the people in this area were defined in a very austere living environment, and the Government is not moving out in a wholehearted approach to this problem by giving completely free cover to a person such as the one I have mentioned, who earns $48.75 a week and is supporting a wife and five children. There is a complete lack of equity in the Government's approach.

Let me refer now to the case of a man who is cast into sickness and is not insured because of apathy, ignorance or, maybe and most likely, lack of means. He is a low income earner. He has no savings. He has to be hospitalised in a public ward while he is supporting a wife and two children. He has to meet debts at an estimated rate of $65.40 a week, excluding Commonwealth benefits, for public ward treatment in New South Wales; a minimum of $10.10 for a stringent food diet for his family - none of us would like to try to live on that sort of diet; rent of $12 a week, if he is lucky; and other charges including fares, clothing and hire purchase of $6. That is a total of about $94 a week. Those conservative estimates understate the true extent of the debt burden an unfortunate person in this position would have to bear.

The only income he has with which to meet those debts in the first week of his sickness is $1.50 child endowment. In the next week he will have an income of $17.50 from sickness benefits - incidentally, a totally inadequate amount. Thus, in the first week he has debts of about $92.50, or nearly 2i times his weekly income if he is in the $40 a week bracket. Thereafter his net weekly debt amasses at the rate of $75 a week. This is a national scandal. It ought to be intolerable to any elected body, a government, which claims to accept a responsibility to* discharge a moral obliga tion to the community. Quite clearly the Government ought to have looked at this from two directions. It should have um.versalised the protection provided by medical and hospital insurance so that this sort of people who need assistance either because of their own errors or through misfortunes beyond their control, do get full cover and so that the burden of this full cover is borne equitably.

I want to move on next, and quickly, to the increased cost of this scheme. A staggering amount is involved in funding this scheme. To put it into an iron lung in order to resuscitate it for a little longer, it is going to cost the Australian taxpayers and contributors an extra $65m. If the Australian Labor Party said that it was going to spend half that amount of money in improvements in social welfare, perhaps by eliminating university fees - I think the figure we recommended was only about $12m - the Government would express alarm. The Government would say: 'Where are you going to get the money?' But in this scheme the Government is providing $65m of which $40.5m will come from the taxpayers and $24m will come from contributors. Then, of course, there is the additional cost which will have to be included later on when the amendments concerning the hospital insurance side of the scheme are introduced. Therefore there is no end in sight for this spiralling cost burden which is inherent in the present structure of health insurance.

One asks the question, quite reasonably, having heard the Prime Minister (Mr Gorton) say that he proposed to reduce taxation by $200m before the end of 1972: How does the Government propose to do this considering the pressures for increased expenditure in education, housing and other areas of health?' Over $6m is written off each year by public hospitals in Australia. Generally speaking, public hospitals are a grave area of need. Some of the most antiquated buildings in Australia are public hospitals. Where is the Government going to get the money, if it reduces taxation by S200m, to meet all of these increased demands and to discharge its responsibilities within the area of health insurance?

I point out to contributors that this will be no easy ride for them. The increase which they will have to bear will be between SI 6m a year and $23m a year. Incidentally, the total amount representing the cost to the Government of resuscitating the scheme, $65m, is about the same as the amount of increase in specific payments of a capital nature to all the States of the Commonwealth in the last Budget. One therefore has some appreciation of the enormity and the massing nature of the cost of maintaining this scheme and this is in spite of the proposed improvements which the Minister for Health has put forward.

In the course of his speech the Minister for Health spoke about the equity of the scheme. This scheme is a fraud. It is shockingly inequitable. The low and moderate income earners have to bear the burden of supporting it and there is a massive transfer from these people over to the wealthy people in order to support them. Let us consider the case at the present time of a low income earner in New South Wales receiving $2,236 a year, or about $43 weekly, who is supporting a wife and two children and paying about $67.60 a year in weekly payments for medical and public ward insurance protection. In fact, after his income tax deductions are allowed, he pays $57.51 for this insurance. His public ward treatment, excluding Commonwealth benefits of $14 a week, costs him $56 a week or $] less than he pays yearly for insurance. Contrast this with a better off man supporting a wife and two children who contributes $88.80 yearly for maximum private hospital and medical insurance protection in New South Wales. This man earns about $10,000 yearly. After tax deductions are claimed he pays $41.64 net a year for his health insurance. In return he receives private ward protection worth $100.80 weekly net of Commonwealth benefit. Now, where is the equity that the Minister was talking about? On what system of social and economic justice is this sort of system based? The poor man pays $57.51 a year for public ward treatment worth only $56 a week net of Commonwealth benefits; the rich man pays only $41.64 yearly for the superior comfort, convenience and advantage of private ward treatment worth $100.80 weekly net of Commonwealth benefit.

Let me put it another way in case this is not making any impression on the Minister who spoke about equity. The rich man pays 28% less than the poorer man but receives goods and services twice the posted value of those purchased by the poor man. Quite clearly the Government's guiding principle seems to be to subsidise luxury and penalise unavoidable need. Income tax statistics indicate that there are probably twelve times more family units on about $2,000 a year than there are on $10,000 a year. As I mentioned earlier, there is an enormous transfer of finance from low income earners contributing to the scheme in order to subsidise the best and the costliest of private hospital treatment for the rich. It is quite clear that the Minister for Health, who is a doctor of philosophy and not of medicine, as are five of the doctors on the Opposition side of the House, has based his philosophy on the biblical injunction of St Matthew, chapter XXV, verse 29 which states:

For unto every one that hath shad be given, and he shall have abundance; but from him that hath not shall be taken away even that which he hath. 1 mentioned the recommendation of the Nimmo report that the open funds ought to be regionalised in their activities. This is the keystone to the whole proposal. It was the best approach which the Nimmo Committee could make towards rationalising the activity of these open funds in an endeavour to cut back on unnecessary competition, on wasteful expenditure of contributors' money on advertising, of the expenditure of $100,000 a year on a slush fund to run political propaganda, and on the purchase of all sorts of status symbols. Generally the Committee tried to tighten up the way in which the contributors' money was being wastefully used by these funds. Having read the Nimmo report I have no doubt that given the opportuntiy - that is, had the Committee not been handcuffed by the restrictive terms of reference imposed upon it by the Government - the Committee would have come down in support of a system of universal insurance under which the cost would have been spread equitably among the people and all people would have been covered. Having been prevented from doing this the Committee did the next best thing. Clearly its thinking was that with regionalisation of the activities of the open funds there would have been an opportunity" to cut back on the wasteful duplication of administrative services within an area, as currently occurs, competitive expenditure on advertising, waste on status symbols and other things, and generally to try to reduce this enormous amount of money wasted in administrative costs or retained in reserves representing about $1 in every $4 contributed to the scheme. The Government has rejected this proposal. Therefore it is allowing to persist in the operation of the scheme the very cause, the very seat, of all the inefficiencies and all the unnecessary costs which 'bedevil it as it now operates.

The recommendation of the Labor Party - it is well known - is that the scheme be universalised and based on a li% levy on taxable income. This would mean in turn that a growth factor would be built into the fund so that as Income grew the total sum of money available to a national health scheme for distribution through a regionalised scheme of insurance funds operating close to the people would grow according to the need. As presently happens we find that the Government's contribution to the scheme tends to be static over a period. Given an increase of X, by the time Y is reached, as a percentage of the total cost of maintaining the fund, X has been reduced considerably and of course the burden has increased. This burden has to be met by the contributor who also provides the money which is returned from the private insurance funds. Additionally, our scheme has the benefit of equity in that the higher one's income the more one pays, the lower one's income the less one pays, and the more dependants one has to support the less one has to pay.

I mentioned the enormous amount of money which is either held in retained funds in reserves or spent in administration costs. I mentioned that the amount was about SI in every $4, or roughly 24% of the contributions made in 1967. In the United States of America the Blue Cross schemes can operate on a retention ratio of 4% for hospital care insurance and 9.6% for medical insurance, so it seems quite incomprehensible that in Australia we have to operate on a retention rate that is several times higher. Nowhere in the Minister's speech has he stated the degree to which the Government is prepared to reduce this ratio. According to the Health Insurance Council the best that can be hoped for is a retention rate of about 15% in management fees. This does not include reserves. But even at a rate of 15% for management fees the figure is far greater than the cost which is incurred in operating the schemes in the United States of America.

Finally, the Minister's statement projects that the Government will eliminate the means test on public ward treatment in public hospitals and at the same time he rejects the proposition - which is implicit in the proposals of the Australian Labor Party - that we do away with the system of honorary services at hospitals and establish full-time specialist medical staff and sessional services. What the Minister does not appreciate is that if he eliminates the means test as he ought to-

Dr Forbes - I did not say anything of the sort.

Mr HAYDEN - Did you not? I am sorry, but that is how I read the report. I withdraw that statement. In any case, the Minister ought to withdraw the means test on public ward treatment at public hospitals, which is a recommendation of the Nimmo Committee, and consistently with this he ought to adopt the next recommendation of the Nimmo Committee that honorary treatment be displaced by sessional services and full-time specialist services, because the means test cannot be eliminated unless this is done. The burden cast on to the honorary service would exceed the capacity of that service to meet requirements. There is no doubt that to eliminate the means test would place a tremendous demand on these services because 86% of the Queensland public prefer public ward treatment at their public hospitals to paying for private ward treatment and this in itself is an endorsement of the proposals of the Labor Party.

Debate (on motion by Mr Buchanan) adjourned.

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