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Monday, 10 September 2018
Page: 5837


Senator SCULLION (Northern TerritoryMinister for Indigenous Affairs and Leader of The Nationals in the Senate) (13:40): I have listened carefully to some of the contributions today. For clarity, the bill doesn't require consumer consent to close a policy. The bill provides for the consumer to be advised clearly about the closure and the proposed change to a new policy, along with the related rules. This will ensure that consumers can choose to accept the default policy nominated by the insurer or choose a new policy themselves. I now take the opportunity to sum up the bills before the Senate—the Private Health Insurance Legislation Amendment Bill 2018; the 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.

Private health insurance is a fundamental element of the Australian health system, and it is supported by this government. More than 50 per cent of Australians have some form of private health insurance. The package of reforms announced by Minister Hunt last October will help strengthen the viability of the private health system by addressing consumer concerns about affordability and the complex nature and lack of transparency of private health insurance. In addition to the investment of over $6 billion per annum for private health insurance rebates, this government continues to take pressure off private health insurance with the introduction of these reforms to deliver the lowest annual premium change in almost two decades.

The Private Health Insurance Legislation Amendment Bill 2018 will amend the Private Health Insurance Act 2007 and associated legislation to support a number of the reforms announced last year. The Private Health Insurance Legislation Amendment Bill 2018 will support younger Australians by enabling private health insurers to offer discounts of up to 10 per cent off private health insurance for Australians under 30 years of age until they turn 45. This reform will improve the affordability of private health insurance for young Australians by delivering hundreds of dollars off the cost of private health insurance and providing them with the benefit of their choice of doctor, timing of treatment and shorter waiting times. It will support Australians living in regional and rural Australia by enabling private health insurance to cover travel and accommodation costs as part of a hospital product for people in regional and rural Australia attending health services often a long distance from their home. Patients and carers will see increased value from their product due to this change, with better funded travel and accommodation.

Private health insurance can be complex and confusing. Certainly this is what we've heard from consumers on the online survey, which had over 40,000 respondents. We want to make the information simpler and more transparent for consumers. The first step in this process is the introduction of a new private health insurance statement, which will replace the current standard information statement insurers are required to provide. The private health insurance statement will offer more flexibility for insurers to provide information that is relevant and personalised for their consumers. Consumers will be given the choice of a new lower-premium policy in return for a higher excess. The changes will increase voluntary maximum excess levels for products, providing an exemption from the Medicare levy surcharge. This will improve affordability for consumers and will be the first time maximum excesses have increased since 2001. Reforms will be made to the administration of second-tier default benefits arrangements for hospitals. These changes will reduce the administrative burden on both private hospitals and health insurers.

This bill will facilitate the termination of products and migration of people to new products with additional consumer protections. This change will make it easier for people to compare products and will generate considerable efficiencies in the system. This bill will strengthen the powers of the Private Health Insurance Ombudsman to protect consumers' interests. The Private Health Insurance Ombudsman will be able to conduct inspections or audits of insurers' premises to verify accuracy of information. Private health insurers have consistently and actively provided access to the ombudsman's 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 knowledge of access to best assist with investigations with these PHIO delegated functions or powers to persons the PHIO considers to have appropriate expertise.

Having a reserve power, even if only rarely used, will give consumers the necessary confidence in the PHIO's role. The powers are analogous to powers of the ombudsman in other parts of his jurisdiction. The purpose of entry in these circumstances is not to obtain evidence to support a criminal or civil prosecution. The intention is to confirm information provided by a consumer and to enable the PHIO to make non-binding recommendations, having received comprehensive information from both parties.

The government recognises that the benefit limitation periods can be an area of confusion for some private health insurance members and has now decided that all benefit limitation periods should be removed to make private health insurance products easier to understand for consumers. Although benefit limitation periods have been applied under the Private Health Insurance Act since 2007, the act prohibits benefit limitation periods longer than specified maximum waiting periods. Consequently, many health insurance policies may have not met the requirements of the act since it was introduced in 2007. Changes to the bill will ensure that people who may have purchased non-compliant private health insurance policies and insurers who may have sold those products over the last decade are essentially placed in the same legal position they would have been in if the products had complied with the act. To this effect, it will appropriately protect consumers of private health insurance and private health insurers.

The two tax bills—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) 2018—deal with taxation related aspects of the reform. These changes will ensure that individuals purchasing appropriate complying health insurance products for private hospital cover with increased excess levels will be able to claim the Medicare levy surcharge exemption. While the legislation brings into effect a number of important reforms, details will be provided in the private health insurance rules, and the government has consulted on the details to these rules. The comments made in response to the exposure draft on the rules released on 16 July 2018 are currently being given careful consideration.

I thank senators for their contribution to the debate on the bills and I thank those who are supporting these bills, including particularly those opposite. There was a last contribution to encourage all Australians and particularly apparently those from Capricornia. Who would know why that would be? But perhaps I could just share with that speaker why it is that the Labor Party intends to set a two per cent increase in private health insurance premiums and to task the Productivity Commission. Well, the Productivity Commission—kick it down the road—is okay. But if a two per cent cap were applied at an insurer level, that would likely result in multiple private health insurers breaching prudential standards. Independent modelling shows under claim inflation of four per cent: 39 per cent of all insurers will be making negative underwriting margins after one year of the two per cent cap, with 58 per cent of insurers negatively underwriting margins after two years. So, this is, as the senator indicated, a matter that you're going to continue to have discussions about, and we in the coalition of course always welcome good ideas and discussions. But I just thought I'd provide some clarity around that idea. I commend the bill to the Senate.

The PRESIDENT: The question is that the second reading amendment moved by Senator Polley be agreed to.