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Tuesday, 11 April 2000
Page: 15689


Mrs DE-ANNE KELLY (4:37 PM) —The soaring cost of health care in Australia in recent years as our population ages has been one of the most difficult policy problems faced by successive governments. Our public hospitals face enormous burdens, and it is a matter of concern to both Commonwealth and state legislators that the public health system, although staffed by dedicated professionals, is being stretched to near breaking point. The challenge for us is to provide a policy context which ensures an equitable and acceptable national health care system. The public system struggles in many cases to meet the increasing demand. There is a need to provide positive incentives to people to have private health insurance and, therefore, seek their medical and health care requirements from outside the public system.

Just over a year after the election of the federal Labor government in 1984 half of all Australians had private health insurance. However, it did not take time for the rot to set in for private medical insurance; the stampede away from private health insurance started. By June 1988 the coverage was down to 47 per cent of all Australians, by June 1992 it had slumped to 41 per cent and by June 1996, just after the election of the coalition government, it had hit an unbelievable 33.6 per cent. In 13 years the Labor government had managed to ensure that private health insurance had collapsed from covering half of all Australians to barely a third. The challenge for the new government was to address this shameful legacy of the Labor Party, which was born because of a mix of incompetence, neglect and disinterest and, frankly, a faith in outmoded, left-wing, doctrinaire approaches that belong in the past.

As I said earlier, private health insurance had fallen to 33.6 per cent of the population. As the government developed its strategies to reverse this collapse—and, I must say, in the face of the most determined opposition from the Labor Party, who clung to the illusion that throwing yet more money at the public health system was the only way to go—unfortunately the stampede continued, albeit at a trickle. In June 1998 it stood at 30.6 per cent and by June 1999 it was virtually stable at 30.5 per cent. In fact, between June 1998 and June 1999 the private health funds recorded their first numerical increase in overall numbers—up 65,000 from 5.728 million contributors to 5.793 million. As I said, back in June 1984, before the Labor Party went to work on the private health insurance scheme, there were 7.784 million private health fund contributors.

Only today it was revealed that Medibank Private, the largest health insurer, now is attracting more than 8,000 new members a week, with a large proportion of these being under 40. The Managing Director of Medibank Private, Mr Mark Burrows, was quoted today in the Sydney Morning Herald as saying that more than 9,000 new members had joined the fund since the last week of March compared with only 3,000 new members a week joining up last October. What an extraordinary change in a little under six months—9,000 new members now compared with 3,000 in October. He also said that Medibank Private membership had grown by 45,000 since July last year, with one-third of that total being recorded in February alone. He said:

... didn't expect things to go up as steeply as quickly.

Hear, hear, to that! The Sydney Morning Herald also reported today that both HCF and MBF have reported sharp increases in membership in the past 12 months. MBF was quoted as saying its February membership gains were up 91 per cent, while in March the gain was 145 per cent. According to Mr Burrows of Medibank Private, `a bit under 20 per cent' of all his fund's hospital claims were covered by no-gap schemes. He said that 90 to 95 per cent of those schemes were with doctors who charged the fund for their entire fee. The rest were so-called known-gap charges where the doctor accepted a fee from the fund then charged their patients an extra amount before the hospital stay. Mr Burrows further stated that almost 2,000 of Australia's 17,000 specialists were participating and that, by the end of this year, half of all Medibank Private's claims would require no gap contributions.

Since June 1999, the government's initiatives in health care have shown a clear surge in private health fund coverage. Only last month official figures were released showing private health fund membership jumped by an impressive 294,000 people—the first four-quarter increase since 1976. It was the biggest continuous surge in membership since 1981 when 10 per cent of the population joined health funds in just nine months. The Private Health Insurance Administration Council stated last month that 31.2 per cent of Australians now had private health insurance. What an extraordinary achievement by the government to not just arrest the slide in private health insurance but to reverse it. Of course, for every privately insured Australian, that is one less potential public health care patient and far less stress and pressure on our hardworked public hospitals.

The government is committed to maintaining a sustainable balance between the private and public health care sectors with the goals of providing more choice for consumers, better quality products and innovation and better access to health care for both public and private patients. How have these objectives been achieved so successfully? Firstly, the 30 per cent rebate of private health insurance premiums was a major initiative that contributed massively to this success. Of course, the Labor Party fought against this initiative all the way. On 1 July this year Lifetime Health Cover will come into effect. This long overdue policy will boost the appeal of private health insurance cover by rewarding membership loyalty and early joining. Those taking out hospital cover early in their lives will pay lower premiums. This will encourage younger and healthier people to join. Thus the rising cost of health insurance premiums will be contained, and the objective of community rating will be maintained as well.

The Health Legislation Amendment (Gap Cover Schemes) Bill 2000 has yet another innovative and practical initiative. One of the most contentious issues with regard to private health insurance that comes to my office—and no doubt the offices of other members of parliament—is gap fees. It is one of the major reasons that people believe that private health insurance is not good value for money. The 1999 annual report of the Private Health Insurance Ombudsman noted that almost one-third of all complaints received concerned benefits and most of the complaints about medical practitioners concerned informed financial consent. Throughout 1999 Medibank Private, HCF, AXA and the Australian Health Service Alliance all announced no-gap cover. By the end of last year the number of patients benefiting from this extended safety net was more than 10 per cent of all hospital stayers, compared with only one per cent at the beginning of last year.

Addressing gap fees is the most difficult problem the government faces in private health insurance. However, there have already been successes by encouraging negotiations and partnerships between doctors, hospitals and health funds. This has been done in two ways: firstly, through the passing of legislation which allows health funds, hospitals and doctors to negotiate to cover the entire medical fee, including any charges above the Medicare benefits scheme and, secondly, by encouraging and promoting simplified billing. While simplified billing does not necessarily ensure that medical gaps are covered, it has underlined the importance of doctors and hospitals providing a better service to patients by giving information relating to the cost of their procedure. Health funds such as AXA, Medibank Private and HCF have developed innovative ways to address the gap, and valuable contributions have come also from hospitals and the AMA.

This bill will allow for the further facilitation of insurance products which cover the gap. It is entirely voluntary and will provide a means for health insurance funds to offer no-gap or known-gap cover without the need for contracts. The government will also amend the existing reinsurance arrangements to establish a medical gap fee pool to further encourage all health funds to offer no-gap products. These new measures prove the government's strong commitment to eliminate the medical gap as far as possible. It is now up to the health funds, hospitals and doctors to work together to produce arrangements that make private health insurance even more attractive than it is at present.

The government has committed funds to support a number of coordinated care trials in the private health sector so that privately insured people can also benefit from programs which help people stay out of hospital and continue living independently at home. Early discharge trials and hospital in the home programs are in place to test alternative models of providing in-hospital care that will be not only more appropriate but also more cost effective. Trial evaluations are expected to be completed by the middle of this year. The government in conjunction with the Australian Consumers Association is also developing a key features statement to assist consumers to compare and contrast different health fund products and see which suits them best. This will be particularly attractive and a valuable service for lower income people. Legislation has also been passed which will assist private health insurance product innovation by allowing funds to offer discounted premiums that are offset by administration savings and loyalty bonuses based on length of membership.

This bill will not just ensure maximum benefits for consumers but also safeguard their interests—something that has been mentioned by other speakers today. Gap cover schemes will need to be approved by the Minister for Health and Aged Care before they can be operative. Such approval will be by reference to criteria specified in regulations attaching to the bill. While these regulations currently exist in draft form, they have reached that stage only after the most extensive consultation with health funds, the medical profession and private health insurance industry representatives.

The principles in the regulations include a number of important features: the proposed scheme must not have an inflationary impact—that is, it does not provide for open-ended reimbursement of medical fees or increase the total cost borne by the contributor; the scheme must genuinely deliver what it promises; it must require doctors to inform fund contributors of any amount they may be liable to pay for a professional service; it must also provide simplified billing; it must protect the professional freedom of doctors and ensure that is maintained; and it must contain provisions to ensure consumers will not be disadvantaged should the scheme be revoked by the minister. The minister will have the power to revoke schemes which do not deliver better outcomes to patients.

Undeniably, the continued existence of the gap is one of the major causes of complaint about private health insurance, particularly when the requirement to pay is not realised by the patient prior to receipt of the bill. Widespread consumer dissatisfaction with the gap has led to the perception that private health insurance is poor value for money, and this in turn leads to resistance to being a contributor. But the government's comprehensive and fully integrated health care policy, as we have seen, is winning back contributors to private health insurance and will relieve pressure on public hospitals as well—two very important aims of this government. But these are not just things that the government is saying. Allow me to quote today from others who have had significant praise for the government's initiatives. In a statement dated 12 May 1999 the Executive Director of the Australian Private Hospitals Association, Mr Ian Chalmers, said:

This Government has now clearly demonstrated it is serious about implementing a process of significant and sustained policy reform in relation to the private health sector.

That was preceded on 11 May 1999 by this statement by the Executive Director of the Australian Catholic Health Care Association, Mr Francis Sullivan:

We applaud the Government for taking a fairer and more practical approach to private health insurance reform than was previously proposed ... ACHCA recognises the need for long term health insurance reform and welcomes this opportunity to make insurance fair as well as attractive.

The National President of the Association of Independent Retirees, Ms Maureen Kingston, has gone on the record praising the government's health care package and particularly welcoming the introduction of Lifetime Health Cover. The AMA president, Dr David Brand, has welcomed this initiative, saying, `There is light at the end of the tunnel.' In the journal Australian Medicine Dr Brand paid tribute to the government's integrated health care package and pointed to the increasing take-up of private health insurance, saying, `The tide is beginning to turn.'

The importance of a viable private health insurance sector can be no better illustrated than by the fact that it contributes some $3 billion a year to health care. This is money contributed by members to ensure that they receive the very best care. But there is a benefit far beyond that. The budget implications of having to find an additional $3 billion a year for national health care would be an awesome challenge for any government. This of course is now supplied by private health insurance contributors. It is a very high priority of government to ensure that every Australian has access to high quality and affordable health care. Four years ago, the coalition government inherited a run-down, ramshackle national health care system. In 1996 private health insurance was going the way of the dodo and the Keating-Beazley government either could not or would not do anything to stop that decline. For all of the Labor Party's professed care and interest, they simply did not reverse the trend of declining private health insurance and nor did they provide a system that delivered true and sustainable benefits for all Australians. This government, with its integrated package, has delivered and, I believe, will continue to deliver in one of the most highly focused areas in Australia: health care.