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Thursday, 25 March 1999
Page: 4399

Dr WOOLDRIDGE (Health and Aged Care) (12:29 PM) —in reply—I thank honourable members for their contributions. The Health Legislation Amendment Bill (No. 3) 1999 addresses government, consumer and private health industry concerns about the prudential regulation of the private health industry identified in the 1997 Industry Commission report on private health insurance. It also enhances the implementation of the government's 30 per cent private health insurance rebate. The bill will promote efficiency in essential regulation of health funds, transparency and accountability for both health funds and the Private Health Insurance Administration Council and increase protection for health fund contributors.

The bill will make PHIAC's role consistent with the roles of other regulators by allowing them to control entry to and from the market, set guidelines and rules for the industry and enforce those rules to ensure compliance. PHIAC will also be given broader inspectorial powers. The existing minimum reserve requirements set out in legislation are arbitrary and inflexible. They do not take into account the individual profiles of health funds. A new solvency and capital adequacy model is widely and generally accepted as being prudentially sound. Its application will be specific to the health insurance industry resulting in improved confidence and stability for the industry.

This bill introduces the requirement that to be approved as a registered health fund an organisation must be a company under the Corporations Law, with the running of the health benefit fund as its primary business. This will mean private health funds are more accountable and provide grounds for increased consumer confidence.

This bill provides a comprehensive new scheme for effective prudential management of health funds. The existing judicial management provisions will be replaced with a new administrative scheme that will ensure an outcome in the interests of contributors rather than creditors or the individual funds. Health fund contributors are also better protected through this bill by restricting health fund moneys for use only in health fund business, ensuring health funds manage their assets in the interests of contributors and requiring them to take reasonable steps to ensure the fund complies with the National Health Act.

Lastly, despite the short time frames, the Health Insurance Commission, the Australian Taxation Office, my department and the health funds have successfully implemented the federal government's 30 per cent private health insurance rebate. Schedule 3 of the bill facilitates administration of the rebate by organisations responsible for this function and provides these organisations with the means to continue to provide a high level of service to people participating in or seeking to take up private health insurance. I commend the bill to the House.

Question resolved in the affirmative.

Bill read a second time.