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Tuesday, 11 April 2000
Page: 15697

Dr WOOLDRIDGE (Minister for Health and Aged Care) (5:18 PM) —in reply—I thank honourable members for their contribution to the debate. The Health Legislation Amendment (Gap Cover Schemes) Bill 2000 will provide an additional means by which private health insurance funds can offer gap cover to contributors. While existing legislation allows funds to provide gap cover under agreements or contracts, there has been very considerable resistance to this approach. When I became minister, virtually no agreements were in place anywhere in Australia. By March 1998, two years after becoming minister, we had still only managed—with a lot of effort—to get 0.5 per cent of hospital admissions in Australia covered by such arrangements. I am pleased to say that, over the last two years, things have changed dramatically and we are now just under 10 per cent of all hospital admissions in Australia and rising fast.

But the resistance has been something that has worked to the disadvantage of consumers. So we are proposing a bill that offers a no contract option that will see more providers willing to participate in gap cover, which will produce obvious benefits to consumers. I have been very pleased with the work of health funds so far to address the issue of gaps using existing legislative frameworks. The efforts have resulted in a dramatic rise in the number of services where patients have received full or near full cost cover. We are keen for the funds to continue their current efforts.

This legislation does not jeopardise agreements already in place. The heightened interest in gap measures generated as a result of the gap cover schemes initiative may provide added impetus to existing fund measures to address the gap. In this way, gap cover schemes will act as a catalyst for more widespread involvement of funds, doctors and hospitals and more widespread availability of gap cover for consumers across the board. The shadow minister expressed concern that the gap agreements currently in place may be resulting in significantly higher prices than that paid for services provided outside the agreement framework. I fear that she has underestimated the business acumen and simple commonsense of health funds. It is in no-one's interests—not least the health funds—to allow medical costs to spiral.

This brings me to another point that I feel compelled to clarify. The member for Fremantle has suggested the existing agreements to cover the gap favour no-gap arrangements while the new measures favour known-gap arrangements. This is simply incorrect. Neither agreement nor schemes favour one approach over another. The decision whether or not to offer a known-gap product is properly one for health funds and doctors to make, informed by knowledge of the market in which they operate and the needs of their contributors. As a result, some funds currently offer no-gap products; some offer known-gap products; and others offer a combination of the two. This flexibility will continue under the proposed schemes.

No scheme will be approved unless the fund can demonstrate in its application for scheme approval that it will not have an inflationary impact—in this we mean over and above what already exists. In order to ensure the schemes do not produce adverse impacts, safeguards have been built into the legislation. I am permitted to approve a scheme subject to conditions. In addition, funds will have to report annually on the operation of the scheme. Yet another control is that I can periodically review the schemes. The proposed legislation also provides for revocation of a scheme if it is not meeting the required criteria as set out in the regulations.

It is worth noting that this legislation introduces protective mechanisms that do not apply to current arrangements to address the gap. It seems strange that the shadow minister is suggesting that the spectre of inflation hangs over this measure. This is especially so when the current measures to address the gap, which were actually introduced by the opposition, do not address the issue of the inflationary effect at all. This measure has been designed very deliberately to ensure that inflationary impacts are not felt through the health system as a result of measures to address the gap. I do not believe that current mechanisms are causing fee inflation, and I do not believe that these changes will do so either. In short, the proposed arrangements are more protective, not less, in ensuring that an inflationary impact is not felt.

Informed financial consent is to be an integral part of gap cover schemes, not just as it is for existing agreements between doctors and funds. Both the shadow minister and the member for Fremantle have made much of the fact that neither the bill nor the regulations contain a definition of `informed financial consent'. The approval criteria contained in the draft regulations require informed financial consent in respect of known gap policies. In this respect, the regulations use the same wording as that contained in the act dealing with hospital and medical purchaser-provider agreements legislation, for which the member for Fremantle herself was responsible.

The fact is that we have done more to promote the expansion of informed financial consent than any previous government. We are producing practical measures to inform and empower consumers. For example, we have recently issued a brochure to better inform consumers about the gap and their rights in relation to practitioner charges. This brochure was distributed throughout December 1999 and is available through all Medicare offices. My department is also developing, in conjunction with the Private Health Insurance Ombudsman, a number of strategies to ensure that more consumers reap the benefits of the provision of informed financial consent.

Schemes will also be independently monitored by the Private Health Insurance Administration Council, known as PHIAC. The shadow minister has expressed concern that the schemes may not reduce the out-of-pocket expenses for consumers. The regulations specifically refer to the fact that I will not approve schemes that increase the total cost borne by health fund contributors. As I have just mentioned, the legislation also provides for PHIAC to independently monitor the schemes to ensure that they genuinely reduce or eliminate the cost to consumers of hospital treatment and associated professional attention.

The regulations have been drafted in advance of the bill being passed to provide all parties with the opportunity to comment. The shadow minister has referred to the fact that the bill provides for much of the detail concerning the approval and subsequent supervision of gap cover schemes in the regulations. It is precisely for this reason that I have made draft regulations publicly available in advance of the passage of the enabling legislation so that parliament can consider the package in its entirety. The shadow minister would be aware that the usual practice is for regulations to be made and tabled after the passage of enabling legislation—and, as a sign of goodwill, we have not followed that in this situation.

This measure aims to increase the attractiveness of private health insurance by addressing one of the main consumer complaints about the product, thus encouraging existing members to maintain their cover and removing some of the perceptions that prevent new members taking up private health cover. We have already introduced a number of initiatives designed to increase the participation rate in private health insurance—for example, the 30 per cent rebate and Lifetime Health Cover. This legislation will complement these measures. I will only approve schemes which will clearly benefit patients, offer informed financial consent, provide for simplified billing where appropriate and do not result in increased doctors' fees nor increase the total costs borne by consumers. I commend the bill to the House.

Question resolved in the affirmative.

Bill read a second time.