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Tuesday, 11 April 2000
Page: 15694

Mr NEVILLE (5:03 PM) —I welcome the opportunity to speak today on the Health Legislation Amendment (Gap Cover Schemes) Bill 2000. The importance of private health insurance membership to the Australian health system cannot be underestimated. For every decrease of one per cent in private health insurance membership, the public purse suffers by $83 million. Labor was content to see private health insurance membership fall from two-thirds of all Australians in 1983 to one-third when it left office. Let us consider that. Two-thirds of all Australians essentially looked after their own health care in 1983. By 1996, only one-third did. In other words, one-third moved from private health care to the public system. You do not need to be Sherlock Holmes to work out that that was going to place the system under enormous difficulty. This was despite the warnings of experts and of former Labor health minister Graham Richardson, who said in 1993 that if private coverage fell below 40 per cent the entire health system would collapse. This is the man who said, `Whatever it takes.' He knew it would take about 40 per cent for the private health insurance industry to survive. Despite the criticism of the opposition and of some outside the parliament, we have endeavoured to get back to a level around that figure.

While Labor was in power, Australians dropped out of private health insurance at a rate of about two per cent a year and premiums increased by an average of 12 per cent a year. Labor basically concentrated solely on Medicare, virtually ignoring the private health insurance industry. It consistently broke election promises not to increase the Medicare levy, increasing the levy in 1985, in July 1993 and again in 1995. But what made it even harder for the private health insurance industry was that Labor removed the tied day subsidy of $25 for private patients and stopped payment of around $200 million for the reinsurance pool.

The previous speaker, the member for Bruce, Mr Griffin, said that the member for Jagajaga talked in her address about the cost of insurance. Of course insurance is dear and of course there will be cost increases, but this government have done something about containing those. When we came to power, the cost of pharmaceutical medicines, for example, was increasing at the rate of 14 per cent a year. Coupled with the inflation rate that Labor left us with, that meant that about every five or six years the cost of pharmaceutical medicines would double. In a very short period—and I am not conversant with the current figure—we have reduced that from 14 per cent to nine per cent. She also talked about immunisation. Of course we have had to do a lot of work on immunisation. It was left in an appalling state. I think we were the worst in the OECD in terms of immunisation. Once again, Labor did not leave us with a very commendable health system in this country.

In contrast, the government has been keen to redress the decline in private health insurance membership and to slow down the rate of premium increases. We have introduced a number of reform measures designed to make private health insurance more attractive to consumers, to stabilise the private health insurance participation rate and to take some of the pressure off the public hospital system. Just over a year ago, the coalition introduced the 30 per cent rebate on private health insurance, which has delivered significant benefits to the 7.5 million Australians who choose to take out private cover. The rebate is available to anyone who has a policy provided by a registered fund, whatever their level of cover or type of membership. Since the rebate began, private health fund membership has increased by almost 300,000. The most recent increase in membership from 30.9 per cent in September 1999 to 31.7 per cent in December 1999 was the fourth consecutive rise in a row. The March figures are due out in mid-May, and I think the House will be surprised at the level of increase—not that I have any privileged information; I do not, but one has only to read today's contribution by the health funds in the Sydney Morning Herald to get some feel for where that might be going.

It must be remembered that this turnabout in private health insurance complements the biggest funding increase to states to run public hospitals in the history of the Medicare agreement. The Australian health care agreements are providing $31.3 billion over the five-year period to 2002-03. In Queensland, the state Labor Health Minister constantly tries to pass the buck for her bad management, citing a lack of federal funding as the cause of her problems. Yet the federal government will increase public hospital funding to Queensland by $7.2 billion in the next five years, an increase of more than 30 per cent. Health care and inflation are running at nothing like that figure. We have to ask just how efficiently the money is being spent in Queensland.

The coalition is going further than just increasing funding. Another coalition initiative designed to slow down the rate of premium increases and to make private health insurance more attractive, particularly to younger Australians, is Lifetime Health Cover. This rewards younger Australians who take a long-term approach to private health insurance. People who join early in life will be charged lower premiums throughout their lives compared with people who join later. For example, after 1 July 2000, someone joining at 30 years of age will pay lower premiums throughout their years of membership than someone who first joins at 50 years of age. Australians over 30 years of age have until 1 July 2000 to make a decision about joining a private health fund. Those who already have private health insurance, regardless of their age, will always pay the lowest premium—as long as they do not leave their private hospital cover for more than two years. Grandfathering provisions mean that anyone born before 1 July 1934 will pay only the base premium, irrespective of the year they join a private health fund.

The system, which comes into effect on 1 July this year, will discourage hit-and-run behaviour, where people join up to claim expensive surgery, drain the system and then immediately leave the fund. We have seen much of that: people join medical benefits—MBF, Medibank or one of the other funds—and have an expensive hip operation, eye operation or the like and then immediately drop out of the fund. There is something distinctly un-Australian and exploitative in that behaviour. Returning to today's Sydney Morning Herald, which I quoted earlier, a report states that Medibank Private is now attracting more than 8,000 new members a week, a large proportion of them under 40 years of age, which is a very promising sign. MBF was also quoted as saying that its February gains were up by 91 per cent and its March figures by 145 per cent. I see the Minister for Health and Aged Care has just come into the House. He will be very happy when he sees the figures in mid-May. On the basis of that bit of intelligence, we are going to see quite an increase in the number of people going back to the private system. Remembering that Labor spent 13 years gutting the system by about two per cent a year, it will be good if the government can get to a level where we start reinforcing it by a similar or better figure.

The Health Legislation Amendment (Gap Cover Schemes) Bill 2000 has a further reform measure and addresses one of the more difficult issues relating to private health insurance, the medical 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 funds. Nothing infuriates people who come into my office more than being in private health insurance for 15, 20 or even 30 years—having used the system not extensively but generally as a form of insurance—and then having an operation and finding that they are charged twice or even three times the recommended fee. That, in combination with the increase in the premiums for health insurance, largely brought about by the attitude of the previous government, has meant that a lot of people have dropped out. What purpose was there if, after having been a loyal member of a private health fund for 20 or 30 years, when you went to have the one operation that you really needed you ended up paying three times the recommended fee?

The gap is a major contributor to the perception that private health insurance does not offer value for money. Hospital casemix protocol data in 1997-98 indicates that the average medical gap for an episode in a private hospital was $151. The total value of medical gaps for in-hospital services for the insured was about $200 million in 1997-98. Consumers want and deserve no gap or at least a known gap in return for their insurance premiums. It is a major source of consternation, as I said, particularly when the requirement to pay the gap is not realised by the patient prior to receipt of the bill.

Another factor that excites people quite a bit is when some specious discount is offered in return for the early payment of the bill. I have no argument with doctors giving a discount but when it is of such a gravity that the person is pressured to pay in a very short period, I really doubt whether the charge was justified in the first place. I know some members of the medical profession—they have spoken to me here—have reservations about this and I respect their views. But, as we move through these health insurance reforms, this is the one area that has to be tackled.

The current legislation allows the gap to be covered in circumstances where a hospital or fund based agreement exists with the practitioner providing the service. Under this legislation, doctors, hospitals and health funds will now be able to reach agreements on new no-gap products without the need for formal contractual agreements. However, the patient's benefit must be clearly demonstrated and should also involve informed financial consent and simplified billing—the very points I was making earlier that they have not existed in the past. No-gap private health products are rapidly expanding, and this legislation will provide more options for the industry and for patients. The number of no-gap private hospital stays is now at more than 10 per cent. Twelve months ago, there was virtually none of this no-gap product around, so it has moved apace. I think that will be a continuing pace after this legislation is passed.

This legislation adds more flexibility to the industry. It is now up to the funds, the hospitals and the doctors to work creatively together to come up with arrangements that make private health insurance more attractive to Australians. However, the regulations will specify criteria for the approval of gap cover schemes. The new system cannot be used in a fee-inflationary way, and the bill provides for ministerial approval of gap cover schemes. I think that answers the member for Jagajaga's concerns mentioned in her speech on the second reading. The ability to cover gaps will make private health insurance a better value product for many existing and potential consumers. These reforms will help to stabilise the declining health insurance participation rate and will complement other measures being taken by the government to stabilise the industry, such as the 30 per cent rebate I talked about earlier and the introduction of Lifetime Health Cover. I commend the bill to the House.