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Monday, 10 September 2018
Page: 5825

Senator BROCKMAN (Western Australia) (12:49): I rise today to speak on the Private Health Insurance Legislation Amendment Bill 2018, A New Tax System (Medicare Levy Surcharge—Fringe Benefits) Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018 and the Medicare Levy Amendment (Excess Levels for Private Health Insurance Policies) Bill 2018.

I will just begin by pointing out that those on this side of the chamber believe in a government-funded system. Obviously, Medicare and the public hospital system provide an excellent level of service to all Australians on a universal basis. There is no means testing and there is no restricted access. But we also believe in a strong private health insurance system. This balance is something that has been difficult to achieve in a public policy sense, but it is something that I think has, over a long period of time—and with the occasional and half-hearted support of those directly opposite—served Australia very well.

The balance between a public and a private health system has given people options and choices. It means that in many categories of health care people haven't had to be placed on waiting lists, which in the end are the inevitable result if we go down the way of a purely public model, where the only way of controlling healthcare costs is rationing. We've seen that all around the world.

Senator Di Natale: Rubbish!

Senator BROCKMAN: Those from the Greens say, 'Rubbish!' to that. I just say to look at the examples around the world. That is the only way of controlling costs in a purely public healthcare system. We believe that people have a right to choose private health and we believe that the government has a role in supporting that choice, hence the current structure that has been put forward.

To the bills: the bills give effect to a number of private health insurance reforms that were announced in October 2017, including a number of significant changes that look to the long-term sustainability and viability of the private health insurance sector and the wellbeing of our entire healthcare sector. They allow insurers to discount hospital insurance premiums for 18- to 29-year-olds by up to 10 per cent. They allow insurers to expand hospital insurance to offer travel and accommodation benefits for people in rural and regional areas who need to travel to treatment.

I will just pause here, momentarily. Coming from a regional area in Western Australia, I know that a lot of people in regional Western Australia particularly—but I suspect this is reflected right across regional Australia—have private health insurance that they can't necessarily use in their own local hospital system because of the nature of the access to choices in smaller country areas. They retain it because they want that choice in case something happens in the future. The ability to include accommodation benefits for those people means they are more likely to be able to access and use their health insurance. I think we've already seen a number of insurers start to talk about how that may be offered as part of private health insurance arrangements.

The bills also boost the powers of the Private Health Insurance Ombudsman and increase its resources to ensure that consumer complaints are resolved clearly and quickly. The bills increase the maximum voluntary excess consumers can choose under their health insurance policy for the first time since 2001. Obviously, consumers have a lot of experience dealing with excess, particularly in terms of car insurance and house insurance, so I think that consumers in the marketplace understand those things very well and that increasing this for the first time in 17 years is a sensible policy change.

The bills also replace the standard information statement with a new, more flexible private health information statement. People should be engaged with any financial decision they make, and also any decision they make regarding their insurance. Making information clearer and easier to understand, and making sure consumers are informed about what a product actually is and what it will enable them to claim, are very important. The bills also look to the administration of second-tier default benefit arrangements for hospitals.

As part of the entire package that the government put forward in October last year, we also saw a $1.1 billion saving to private health insurance members through lower medical device costs; better access to mental health services through removing the two-month wait period to upgrade on a once-off basis; the introduction of standard clinical definitions across all policies; and the introduction of an expert committee to deliver options to reduce out-of-pocket costs and to improve models of care for outpatient rehabilitation and psychiatric care. Obviously, the final one is very important; out-of-pocket costs are a huge concern to many consumers. The government is very cognisant of the need to not only allow consumers to understand the nature of the out-of-pocket costs that they are incurring but also give consumers as much choice as possible in reducing those out-of-pocket costs.

The bill also allows insurers to transfer all policyholders, with their consent—I make a very strong note that it is with their consent—from closed products to current products. There are a very large number of products in the marketplace that have a very small number of participants in them. Obviously, that is an inefficiency in the system that would be beneficial to clean up, but, again, it needs to be with the consent of the insured. This measure will assist insurers in the implementation of the new gold, silver, bronze and basic products. Obviously, this categorisation has been met with fairly widespread support. There are those who wish to label the basics as junk policies. Obviously, those on this side disagree with that; they are what they say they are: they are basic policies that offer a low level of cover in a private health insurance sense but they come at a lower cost than other options that are available. As long as people go into these policies with open eyes, we should be accepting of those decisions that people make.

Benefit limitation periods, which restrict access to services such as psychiatric care and gastric banding for up to 36 months, have been a source of confusion for some private health insurance members. The bill improves consumer transparency by removing the use of benefit limitation periods in private health insurance policies including psychiatric care and gastric banding. This bill ensures that the consumers who have purchased benefit limitation periods—inclusive policies—since the Private Health Insurance Act was introduced do not need to repay premium rebates they have received, are not retrospectively liable for the Medicare levy surcharge and are not liable for Lifetime Health Cover loadings. As part of the package of reforms, the government committed to a significant range of changes to the private health insurance system. I think most people would agree, regardless of where they stand on the issue, that it is the most significant reform in this area for a long period of time. It has been widely welcomed, though not universally.

In terms of the amendments that have been put forward by the government—as I say, we are strengthening the viability of the private health insurance system and we are addressing issues of affordability, complexity and the perceived lack of transparency. I think all insurance documents have a level of complexity that probably baffles many of us, so any simplicity and clarity that can be applied in that respect is very important. I was part of the legislation committee report for these bills, and I note that the committee, of course, recommended that the bills be passed.

The committee report refers to comments made about the strengthening of the Private Health Insurance Ombudsman's powers. This bill will strengthen the powers of the Private Health Insurance Ombudsman to protect consumer interests. The Private Health Insurance Ombudsman will be able to conduct inspections or audits at insurers' premises to verify the accuracy of information. Private health insurers have consistently and actively provided access to ombudsman investigating officers to verify the accuracy of information, and this is expected to continue. The ombudsman will provide private health insurers with at least 48 hours notice of access, with the ombudsman delegated functions or powers to be exercised by persons with appropriate expertise. Having a reserve power, even if rarely used, will give consumers confidence in the role of the ombudsman. The powers are analogous to ombudsman's powers in other parts of the jurisdiction of the ombudsman and they are to be used as a reserve power to address consumer complaints where there is a compelling justification to do so. The purpose of entry in these circumstances is not to obtain evidence to support a criminal prosecution. The intention is to confirm information provided by a consumer and to enable the ombudsman to make non-binding recommendations, having received comprehensive information from both parties. The proposed government amendments also postpone the commencement date of the increase in powers of the Private Health Insurance Ombudsman from 1 July 2018 to the day after the act receives royal assent, because these changes are, of course, not intended to be retrospective.

There has been some concern raised—and it was raised in the Senate inquiry—that the entry and inspection powers are too extensive. The ombudsman's powers are recommendatory rather than allowing criminal or civil enforcement action, such as those available to the ombudsmen for other agencies where entry and inspection requires consent or a warrant. A written-notice period of 48 hours is appropriate and proportionate, given the need for the effective and efficient exercise of the ombudsman's powers. Labor senators supported a call in the committee report for a review of the measures after implementation. Reviews of government policy changes are conducted regularly, often by independent experts, without the need for directive legislative provisions. The government is already committed to a review of the clinical categories used for the gold, silver, bronze and basic product tiers, in 2020 and 2020-21, to ensure they are relevant and effective and are achieving the outcomes desired, certainly by those of us on this side of the chamber.

In the committee report Labor senators also called on the government to set a two per cent cap on private health insurance premium increases and to task the Productivity Commission with a review of private health insurance. If a two per cent cap were applied at the insurer level, it would likely result in multiple private health insurers breaching prudential standards. Obviously, that is not something the government would support. Independent modelling shows that, under claims inflation of four per cent, 39 per cent of all insurers would be making negative underwriting margins after one year of the two per cent cap, with 58 per cent of insurers having negative underwriting margins after two years.

A 2017 Senate inquiry into the value and affordability of private health insurance and out-of-pocket costs reported at the end of 2017 and substantial reforms are currently being implemented—the reforms I have just talked about. It is very sensible to bed down those reforms and consider their impact before we embark on another review. During the Senate committee hearing into the legislation, several senators argued that the ability of people with private health insurance to receive the premium rebate and then to elect to be treated as a public patient in a public hospital meant that their treatment was being paid for twice. This is simply not true. Premiums charged by private health insurance companies reflect the benefits they pay for their members. The rebate is then based on the premium charged. If people with insurance are opting to be treated as public patients when they attend a public hospital then this will be reflected in the benefits paid by the insurer, and ultimately in the premiums and the private health insurance rebates paid. The rebates do not include amounts for hospital treatment that has not happened and will not happen.

We also need to be very clear that people have a choice about whether to use the public or the private system. This goes back to where I started. People in Australia do have a choice. They have a strong choice between the private and public hospital systems. The public hospital system has no means testing and no barriers to entry, and that is a very important part of our system, our mixed system, which those on this side of the chamber are very keen to promote.

In terms of where we sit on the overall health system, we on this side want to see a balance between the public and private sectors in the Australian healthcare system, something that has served us well for a number of years, and continues to service us well, and something that the Australian people have voted with their pockets to support.

Although Senator Di Natale particularly wishes to label this as a matter of serving certain corporate masters or the big end of town, the reality is that many of those who have private health insurance who are on low and fixed incomes decide to spend a significant part of their income on the flexibility, choice, security, certainty and peace of mind of having a private health insurance policy that suits them. Obviously, those on lower incomes aren't gaining a huge tax benefit out of their decision to have private health insurance because they simply aren't paying tax or as much tax. So I think it's very important to realise that Australians choose private health insurance for a range of reasons. It's not simply for those set out by Senator Di Natale, There are a range of reasons. People in the bush have a range of reasons why they choose to have private health insurance, even though they may not have access to any facilities in their local area that they can claim.

We saw a fear campaign on Medicare at the last election and we continue to have lies told, particularly about the government's view on Medicare, the public hospital system and the public healthcare system. Medicare funding continues to increase each and every year. Medicare will never be privatised; it will never be sold. It is a core government service. We will continue to deliver every element of Medicare, going forward. It's certainly a very, very important part of our healthcare system. In fact, this government is investing record levels of funding into Medicare—more than $22 billion into Medicare this year, over $1 billion more than last year. This will increase to $26 billion in 2019-20.

Obviously, funding of health care and funding of the private health insurance rebate come on the back of good economic growth and a good economic plan for the future of this country. That underpins everything that this government is trying to do. With a strong economic plan, we can have the positive dividends that deliver a strong economy, a strong level of economic growth and strong employment growth, with over a million people into jobs since this government came into power. Through that, we can also deliver a very strong mixed public and private healthcare system.