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Monday, 10 April 2000
Page: 15606

Dr THEOPHANOUS (8:00 PM) —The House is considering the Health Legislation Amendment (Gap Cover Schemes) Bill 2000. This bill is obviously concerned with fixing up a problem which is prevalent in most health schemes around the world and which is the kind of problem you have when you are trying, in a health system, to bring together the concerns of both the private sector and the public sector. We have a situation in Australia, especially in private hospitals, where doctors are able to charge a lot of money—sometimes an excessive amount of money. We have a problem that people find that, even after they have paid the Medicare levy and their private health insurance, when they go to a private hospital, they are hit with a very big bill. This is the so-called gap which exists in the system and can be very significant—thousands of dollars in certain cases. Obviously this is a factor that has been of concern to the system for a long time. Many people have refused to take out private health insurance over a number of years because they felt that this gap problem meant that, effectively, it was hardly worth it: you took out private insurance, you went to a private hospital and then you ended up being hit with a very significant bill, on top of what the private insurance company was going to pay.

This problem was recognised some years ago, especially by a former minister for health, Graham Richardson. I remember this quite well because, at that time, I was the parliamentary secretary to the minister for health. Then Senator Richardson was concerned to see whether there was a way of resolving this issue of the gap. There were discussions about ways in which this might be done. After Senator Richardson left the health portfolio, and left politics in fact, and was replaced by the Hon. Carmen Lawrence as the minister for health, the situation was put forward that we might be able to deal with this issue by having some arrangements between certain particular medical specialists working with particular hospitals, and by having agreed schedules of fees, so that people would be aware of the sort of cost that they would incur when they went to a private hospital on the basis of those doctors' arrangements with that particular hospital. These kinds of schemes were starting to have an impact and were starting to work.

The government and the Minister for Health and Aged Care, Dr Wooldridge, did attempt to do something in this area but, unfortunately, the problem was that the Australian Medical Association did not want to participate too much in this program. The reason for that was that they felt that to require doctors to have specific arrangements with specific hospitals was somehow an intervention in the doctor-patient relationship. We will explore this in a minute but, essentially, they were saying that, if you limit the doctors to particular hospitals and particular schedules in particular hospitals, then you limit the medical choices of doctors. I think this would be the case in only a very small number of cases.

We really need to get to the heart of this. The reason the Australian Medical Association was opposed to that particular arrangement, with those sorts of agreements taking place between private hospitals and doctors, was not so much the interference in the doctor-patient relationship, but rather what it saw as interference in the freedom of doctors in private hospitals to charge whatever they liked. It simply did not want doctors, especially specialists, to be limited in any way in what they charged in a private hospital. Because of that, it asked the government, `Is there another way in which you can deal with this issue? Is there another way in which you can deal with the problem of the gap without limiting doctors' fees?' This legislation attempts to deal with that issue. It attempts to deal with the issue by saying that it is not necessary to have an agreement between the doctor and the private hospital but, nevertheless, it may still be possible to fill the gap, and so have an insurance scheme which, in a sense, fills the gap between the schedule fee and the doctor's charges for that particular operation or medical procedure.

All this may show good intentions, but the question is how is this going to actually work—especially if we look at what the AMA's concern was, namely that doctors should be able to charge whatever they liked in relation to that extra cost on top of the schedule fee. If that is going to be the situation, this is where the opposition have concerns, and we have concerns about this particular program. Let me say that no-one is infallible in trying to resolve this issue. This is a very hard question. When you have a health scheme which, on the one hand, is based on a kind of free enterprise principle that people should be able to pay as much as they like and doctors should be able to charge as much as they like in the private system but where, on the other hand, the public has to pay—especially through the private health insurance rebate system, which has been introduced by the government—we have a situation where there is a public factor, namely the payment of the private health insurance rebate through the public purse, through the taxation system.

So, on the one hand, there is the principle of private enterprise and charging whatever you like and, on the other hand, there is the fact that we have the 30 per cent rebate issue. Because of that, there is obviously public concern about the costs, but there is another factor as well. If doctors are able in private hospitals to keep putting up their charges, this inevitably has an impact and puts pressure on the public hospital system: if the gap between what the doctors are being paid in the private hospitals and what they are being paid in the public hospitals becomes huge and unsustainable, there will be pressure on the public hospital system as well. So we do have these problems.

As I said before, the parliament needs ideas in this matter. I do not think this is an issue which should be party political. This is an issue which requires solutions to be thought out via creative ideas, wherever they may come from. As I say, governments—the previous Labor government and the current government—have struggled with this issue. But where are we to go if we are to try to get a solution? Can we actually have a situation where doctors are able to put up fees as they wish, even in the private sector? If we do, then I do not see how we are going to get a resolution of this issue of the gap.

The bill itself recognises this matter. It talks about the inflation factor and says that there can be a problem of inflation here, such that if the government says, `All right, we will give health insurance companies the capacity to insure for the gap,' it recognises that some doctors may take advantage of this situation and simply put up their fees even more, so that the size of the gap gets bigger. In that situation, all you will have achieved is simply to have helped the doctors, especially specialists, increase their fees and their incomes for no net benefit whatever, either to the public health system or to the private health system. That whole inflation factor is a serious concern.

The minister has the capacity under this legislation to reject schemes where, in his opinion, there has been excessive charging and not enough account taken of this inflationary factor. Unfortunately, however, we are not given any precise criteria as to how this is to be assessed or monitored. The minister is, I think, supposed to provide a set of regulations in relation to this issue but even there, from what I understand, we are still not given a precise understanding as to how this is to proceed. This is why I support the call of the shadow minister that we should try to get this bill before a Senate committee, to look at the details of how it is supposed to work and at whether the protections which are claimed to be in the bill are actually present. I am not convinced that they are.

Look, for example, at the idea that the scheme must not have an inflationary effect. How are you going to determine whether, when a particular doctor puts up their fees, there are in fact reasonable grounds for doing so or whether what has happened is simply an inflationary effect? There are specific instances already in existent gap schemes where the putting into place of a gap scheme simply resulted in an increase in the gap. One of the areas is obstetrics and gynaecology, but I am not entirely sure what other areas have been affected. Certainly though, we have had cases of individual doctors and hospitals putting up their fees in response to the gap cover scheme.

One of the concepts introduced here—and I repeat that these concepts are pretty difficult—is one called the known gap. Presumably, the doctor will have to inform the patient, in advance, of the known gap involved in relation to the specific operation or procedure that is going to be taking place. But again, there are no actual provisions in the legislation, as far as I can see, which show what sorts of requirements are going to be put in place in terms of regulations, forms that need to be filled in, or procedures that doctors are to follow with respect to informing their patients about the known gap in particular instances.

The issue at the heart of this is that doctors have to recognise that, although society intends to recompense them for their training, their education, their years of study and their experience, nevertheless they also have a responsibility for the health of the community and for keeping the costs of health at reasonable levels. This responsibility is something which they and we as a society have to face up to because, if the medical profession is going to take advantage of this gap cover scheme, put up costs and inflate the costs of the health system in general, then this scheme will backfire and we will be in a lot of trouble with it. Already, the costs of the rebate are expected to be in excess of $2.2 billion. That is a lot of money to support the private insurance system. If, as a result of this cover scheme, we have an even bigger blow-out in private insurance costs and the support of them by the government, the whole thing will become unsustainable. We are not saying that doctors should not be compensated according to their professional achievements but the idea that fees can continue increasing in the private hospital area to the point where they become exorbitant, to the point where you are looking at 160 per cent of the schedule fee—we are not talking about 110 per cent or 120 per cent but up to 160 per cent or 170 per cent of the schedule fee—would mean that we are looking at a serious situation.

Perhaps one way out of this—and maybe the Senate committee will ponder on this—would be for the medical profession to accept a voluntary limit above the schedule fee, at least while we trial this program of meeting the gap. Perhaps something like an upper limit of 30 per cent on the schedule fee could be agreed to so that doctors would be able to say okay and patients would be able to have that expectation that they will know roughly what they are up for. With the current arrangement, the danger of the whole system exploding in an inflationary way is very serious, and I do not believe the bill has dealt with that issue. As I said, we still have to find a way of dealing with this private-public problem with respect to health. We have to do it without ending up with the dreaded American type of situation where, essentially, you have two classes of health care: people who are insured—it costs a lot of money to be insured in the United States and, even then, they have to pay money on top of their insurance—or you have people who cannot afford private insurance and are then put into a second-rate medical system. Often, even with that second-rate system they have to pay exorbitant amounts. We have all heard the horror stories of people going into hospital, having to pay bills of $50,000, $60,000 or $70,000 and losing their houses and things like that in order just to pay for an operation. I support the idea of finding a solution to this problem. I support the general spirit of this legislation, but I would like to see the Senate study ways and means of ensuring that it can be successful and that it can deal with this issue of costs.