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Tuesday, 11 April 2000
Page: 15684

Mr GEORGIOU (4:09 PM) —The Health Legislation Amendment (Gap Cover Schemes) Bill 2000 continues the government's reform of the private health insurance system. This reform is important for ensuring that the Australian health care system continues to deliver timely, affordable and high quality health care to all Australians. We in Australia are fortunate to have a health care system that performs extremely well by world standards. It has achieved this in large part because the Australian health care system has sought to strike a balance between the public and private sectors of health care delivery. That balance is fundamental for both those who use and those who deliver health care services in Australia. That balance has come under serious threat, however, because of the massive fall in levels of private health insurance membership since Labor came to power in 1983.

In 1984, 50 per cent of Australians had private health insurance. By 1998, when this government introduced the private health insurance rebate as an important measure designed to reverse this trend, health insurance coverage had fallen to just 30 per cent of Australians. Even more worrying than this staggering drop in numbers, the years of the Hawke-Keating Labor governments saw a dramatic change in the composition of those Australians who took out or maintained private health insurance. Younger, healthier and wealthier Australians dropped out of private health insurance schemes at a great rate. Older, sicker and poorer Australians stayed. The only group of Australians whose participation in private health insurance held ground under Labor were low income Australians, specifically the lowest 20 per cent of income earners. They kept paying for their health insurance, and struggled to do it, while middle and upper income groups stopped paying and chose instead to rely on the public health sector.

What was Labor trying to do to stop this? It abolished tax rebates for private health insurance and phased out the $100 million annual subsidy from government to the reinsurance pool. It removed the subsidy for private hospital beds. It reduced the proportion of the schedule fee paid by Medicare from 85 to 75 per cent. It made it more and more difficult for those Australians who were struggling to keep their private health insurance to do so. The shift away from private health insurance under Labor put extra unwanted and unsustainable strain on the public health sector. It also put extra strain on the private health sector. A drop in that membership threatened the financial viability of the private health insurance industry. This flowed on to affect the financial viability of many private hospitals. It also left a large rise in health insurance premiums which, in turn, reduced the incentive for Australians to take out health insurance.

Completing this vicious circle, more Australians left private health insurance, more strain was placed on the public sector and so on. Something had to be done to break this vicious circle. Something had to be done to give more Australians an incentive to take out private health insurance so that our public health sector did not collapse under the weight of a burden which should continue to be shared between public and private. This is a matter of good public policy and of good commonsense.

This government has bitten the bullet and implemented key reforms needed to attract people back into private health insurance. For instance, in September last year government legislation was passed to introduce the new Lifetime Health Cover scheme, which will start on 1 July 2000. This reform will reward loyalty to, and early joining of, private health insurance schemes. It is designed to encourage younger and healthier people to participate in private health insurance.

Another example of important health care reform introduced by this government is the 30 per cent rebate on health insurance premiums. This measure was designed to improve the attractiveness of private health insurance to consumers, and the measure is working. The tide is turning. Private health insurance membership has risen in each quarter since the measure was introduced—almost 300,000 new members have taken out private health insurance.

What was Labor's position on this important and successful measure? It opposed the rebate from beginning to end. It opposed it bitterly and it opposed it ideologically. Labor was so ideologically blinkered and so irrationally prejudiced against any strengthening of support of private health insurance participation that it opposed the rebate, even when doing so would have injured tens of thousands of families with private health insurance in Labor's most marginal seats. I have pointed out Labor's ideological blind spot on this issue in this House before. I have also pointed out Labor's record on health care reform, and I will briefly do so again.

There has been a huge gap between Labor's rhetoric of equality and what it has actually been prepared to deliver to Australians when it had the chance both during its 13 years in government and, more recently, in opposition. That rhetoric has been accompanied by Labor scare campaigns asserting that the government wants to dismantle Medicare and destroy the viability of the public health care system. Nothing could be further from the truth, as was illustrated in fact by the Minister for Health and Aged Care in the course of question time today. This government is committed to upholding the Medicare system, which provides free public hospital services to all eligible Australians on the basis of clinical need. In order to do this, the viability of the private health sector must be secured. Labor would do well to recall the words of one of its own, Neal Blewett, who introduced Medicare in 1984. I have quoted him before, and I think he will be quoted for a long time to come. Dr Blewett said:

Medicare's continued success and high popularity is dependent upon the maintenance of a strong, viable private health care sector.

This is a simple but important message: equilibrium must be maintained between the public and private health care sectors. Dr Blewett is not the only one on the Labor side to have said this. It has been a consistent refrain of all responsible Labor ministers. But what has Labor sought to do? It has sought to undermine the viability of the private health care system, not appreciating that this would place intolerable burdens on the public health care system. I suspect that, in its heart of hearts, Labor really did believe that it could keep on doing this without the most vulnerable people in the community ultimately opting out of private health insurance, no matter what the cost. But, as I said, that policy failed, it proved itself deficient, and this government is taking a number of steps to restore the equilibrium between private and public health care systems to the benefit of both.

The Health Legislation Amendment (Gap Cover Schemes) Bill 2000 is a further step towards restoring that equilibrium. The bill will implement another important part of the government's health insurance reform package. The bill addresses the important matter for private health insurance of the gap. The gap is the difference between fees charged by doctors for in-hospital medical services and the combined Medicare rebate and refund from private health insurance. The gap is currently paid by the health fund member. It is estimated that health fund members pay around $200 million each year in out-of-pocket expenses. Apart from the cost of private health insurance premiums, these out-of-pocket expenses are one of the strongest deterrents to people taking out private health insurance. There are probably three or four factors involved which come through consistently in constituent mail, including the sheer inconvenience of these payments, the fact that they are unplanned for and that they put an additional burden onto people who pay both the Medicare levy and private health insurance.

This bill enables private health insurance funds and health care providers to work together to offer consumers health insurance products which either cover the gap entirely or limit the consumer's out-of-pocket expenses by insuring for a known gap. Although gap insurance has been possible in Australia for some time, health care providers on the whole have been unwilling to come to arrangements with health insurance funds to limit consumers' out-of-pocket expenses for medical services. Many members of the medical profession have resisted making such arrangements within what they would consider the unacceptable constraints of the contractual agreements currently provided for in the National Health Act 1953.

At the heart of this resistance, there are concerns about managed care and accompanying fears of intrusion into the doctor-patient relationship. This bill recognises doctors' concerns about these issues and it responds to them. It allows them to reach agreements about gap insurance without any involvement in the contractual regimes they have criticised so strongly. Significantly, the Australian Medical Association has expressed its support for the measures proposed in this bill. The AMA president, Dr David Brand, has described these measures as `a major breakthrough for providers, for the health care funds, for the medical profession and for the quality of care we can provide'.

The government is therefore creating an important opportunity. Once this bill is passed it will then be largely up to doctors, other health care providers and private health insurance funds to work together to offer Australians a better choice of more attractive insurance products. Importantly, this bill provides that the Minister for Health and Aged Care must approve any gap cover scheme devised under this new legislation before the scheme can come into effect. The minister will be required to assess any scheme according to the criteria provided in the regulations. The minister will be responsible for ensuring that these new gap insurance measures work in the interests of consumers, that they continue the process of restoring Australians' confidence in the private health insurance industry and that they thereby rebuild a culture of participation in that industry. It is part of an important package of health measures that this government has brought forward since its election and which has created a far stronger and more effective Australian health care system. I commend the bill to the House.