Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Health Legislation Amendment (Gap Cover Schemes) Bill 2000

CHAIR —Welcome. Witnesses are reminded that the giving of evidence is protected by parliamentary privilege. However, the giving of false or misleading evidence may constitute a contempt of the Senate. We do have before us your submission. Do you wish to make any alterations to that submission?

Mr Blackmore —Not at this stage.

CHAIR —Do you care to make any comments?

Mr Blackmore —Yes, I would like to make a few brief comments. It is clear from the Consumers Health Forum's perspective that in the past few years consumers have voted with their feet and dropped their private health insurance, primarily because of the gap problem. This is well documented, not only because of individual gaps but also because of the uncertainty and surprise that many consumers find when they have a medical procedure. Many submissions have recommended minor changes at the margins to the legislation that has been put forward, but I take Senator Evans's point that what we have before us is a framework to develop this issue, and I think it is important that we proceed down this path as quickly as possible.

One of the issues that we did not put in our submission but which I would like to touch on now is the issue of a review of the legislation after two or three years to ensure that it is actually meeting the stated aims of the minister's second reading speech. It is important that we review the way in which the legislation operates. In the past, private health insurance has been fairly over-regulated and it has been very prescriptive. I think the legislation before you at the moment provides plenty of scope and opportunity for health funds to develop products which they feel comfortable with, which medical providers feel comfortable with, and which, at the end of the day, consumers will feel comfortable with. That will be shown in the figures on private health insurance.

Senator CHRIS EVANS —I would like to explore with you particularly this question of informed financial consent because this is obviously your area of expertise as well. It seems to me that it is one of those things everyone is in favour of but no-one knows how it is going to work. It seems that this legislation does not take us much down that path either. I see in your submission talk of a requirement about informed financial consent which I think is much stronger than other witnesses envisage being the case. Maybe you would like to elaborate on what you think the key elements of informed financial consent ought to be and how, in the hospital-medical environment, we could put that in place, and who ought to be responsible. There seems to be a bit of a shifting from whether the fund is responsible or the surgeon or the private hospital. I am not clear who is responsible for providing an informed financial consent under this model.

CHAIR —Before you answer that can I just add to that because it is on the same issue. You are saying in your recommendation that it should be the principal practitioner who should provide names of all practitioners involved in treatment, and their individual charges. If the principal practitioner is a GP and you are looking for, say, a vascular surgeon in Sydney like one of our previous witnesses today, are you suggesting that that principal practitioner should provide the name, the address and contact details for every vascular surgeon in Sydney or Australia, or wherever, and all their costs and variables? What an onerous task we are talking about. I would like to just have a clarification of what that recommendation really means.

Mr Blackmore —I would like to start with the general first. The difficulty for consumers is that often there is a lot of buck-passing on the issue of who are going to be the treating practitioners and what their costs are going to be. At the moment hospitals and health funds under the second tier default arrangements, which are not necessarily related to this, have a provision for informed financial consent within those arrangements. It seems to us that they do not work at the moment, particularly for the very reasons that Senator Evans has outlined, that there is no clear notion about who is going to be responsible for ensuring that the informed financial consent provisions apply.

Senator, to take your point, it seems to us that consumers are at an information disadvantage when it comes to choosing the appropriate medical provider and cost is, of course, only one of those elements in terms of the choice of provider. I think our submission was not suggesting that the principal provider should provide lists of all the providers within that specialty. Our submission was arguing that the principal provider should provide the names of the anaesthetists and the assistant surgeon and the others who are going to be involved in that particular episode of care.

CHAIR —But what justifies that? Your recommendation says:

The principal practitioner should provide names of all practitioners involved in treatment and their individual charges—

That is fine if you mean everyone involved in that particular treatment. You continue:

a clear statement of circumstances under which the amount payable may vary and where possible an estimate of possible additional charges in these circumstances.

I do not see how a general practitioner would be able to do that: have the access to the information and the time and the resources to do it. I do not know whether you were here earlier on to hear evidence of the variables from any surgeons when they actually open up a patient on the operating table, but how on earth are you going to demand that type of information availability to be given by a GP on initial consultation?

Mr Blackmore —I think the important thing to realise, Senator, is that in most instances the surgeon will be the principal provider and the surgeon should have a fair idea of, firstly, the others that are going to be involved in that particular episode of care. And, also, given that they probably know a fair bit about the patient's history and what sorts of other things might go wrong at the time of surgery, if there is the need for other procedures to occur at that time the consumer is alerted to those possible additional surgical procedures that might occur at the same time.

CHAIR —Don't you think that it is really whistling Dixie in a west wind to think that everything is going to run according to Hoyle in a theatre where there is a patient there and there may be other requirements placed on the surgeons—any of the doctors at all—or the hospital for that matter and that you would have to somehow or other crystal ball gaze months or weeks in advance and that unless that is done people should presumably not be liable?

Mr Blackmore —Perhaps you have taken the words that we have written too strongly and maybe we could rephrase the words. What we are attempting to do here is to tease out, in those very small number of instances when somebody has a surgical procedure, the chances that that particular person might have additional procedures at that time, given their particular state of health, and whether the principal provider is able to alert the consumer to those possible other surgical procedures that might occur at that time and the cost of those procedures. We would envisage that this would occur in a very small number of instances.

CHAIR —I think you might be surprised at how many instances there would be that would fall outside what you are saying.

Senator CHRIS EVANS —I think it is a reasonable point—and you go on to say that, in emergency situations, et cetera, you obviously cannot do that. But I want to come back to what you think the responsibility of the insurance company is. What role do you see for them? We have independently minded medical practitioners operating out there, some who are in the no gap scheme and some who are not, and the patient will go along to an institution and be faced with some participating and some not. The anaesthetist might not be in it but the surgeon is. It just seems like it is going to be very hard to tie any real informed financial consent down in all that.

Mr Blackmore —I think there is an obligation on providers, hospitals and consumers to work together to find a way to effectively do that. It is a burning issue for consumers. The legislation provides a framework; we simply need to work together to make sure that it works in practice. We obviously have some views about who ultimately is responsible. We think it is the responsibility of the principal provider to ensure that the consumer has the information.

Senator CHRIS EVANS —What is the principal provider? Is that the hospital or the surgeon?

Mr Blackmore —We would imagine in most cases it is the surgeon.

Senator CHRIS EVANS —So you think that when they are discussing the procedure with a patient it is their responsibility to make it clear as much as they can what the financial implications are?

Mr Blackmore —Indeed.

Senator CHRIS EVANS —What about this question that Mr Sullivan raised about not necessarily getting certainty in terms of no gap and that, because these things are not binding—Dr Brand and others made it clear that you cannot force people to be part of the scheme—people may purchase no gap insurance but not necessarily get no gap insurance?

Mr Blackmore —As I said in my opening remarks, I think we need to make a start on the issue of gaps. The issue has been on—

Senator CHRIS EVANS —Don't get me wrong—I am playing devil's advocate in a sense to tease out these problems before they occur. I do not mean to put you on the spot, but this is obviously a real issue. How should we be dealing with that?

Mr Blackmore —At the end of the day, consumers want a range of product choice, and no gap products will be one of the choices that they will have. The issue of uptake, which is at the core of your question, is something that we have to wait and see. That is why we would be suggesting a review within two or three years to see whether or not the objectives of the legislation have been met. If there is only a 10 per cent or 15 per cent take-up, then clearly we need to go back to the drawing board and start again.

Senator CHRIS EVANS —From a consumers point of view, when I buy no gap insurance I expect no gap. What Mr Sullivan was raising was that no-one can actually guarantee that. I think consumers out there will assume that no gap insurance means what I think it means, which is that you do not get a bill—I was going to say like house insurance, but they give you an excess thing, so I will not use that example—and that if you have a procedure you are right. He raised the concern that there is just no guarantee possible in the way we are structuring the system.

Mr Blackmore —There are no guarantees, but I think at the end of the day providers are probably aware that consumers are clamouring for no gap policies. If the medical profession does not at the end of the day deliver no gap policies then people will find private health insurance irrelevant to their needs. So there will be an incentive on private practitioners to offer, or to at least be party to, no gap policies. Clearly, the uptake is something for which there will be many variables. One of the ways in which consumers might at least be provided with some information would be the analogy currently with private health funds providing a list to consumers of hospitals that they have contracted with. So it may be that private health funds provide lists on their web site, or on request from consumers, of practitioners who are party to the no gap policies. That would be one way to at least start the ball rolling.

Senator CHRIS EVANS —Yes. The suggestion was put about concerning the potential of making this a disallowable instrument. You talked about the review. Do you think the disallowable instrument, tabling the schemes in parliament and then being subject to being disallowed, is a useful addition to those protections or do you share the concerns of others that that would work against funds offering the schemes?

Mr Blackmore —It seems to me like a bit of overkill. Possibly one way to address that particular issue would be to amend the regulations to ensure that the minister must revoke a no gap scheme if the preconditions about being non-inflationary and the other preconditions are not met. That might be one alternative way, rather than making it a disallowable instrument.

Senator CHRIS EVANS —Yes, a less cumbersome instrument. What about that inflationary impact? It seems to me that an unstated assumption under all this is that there is going to be a six to seven per cent increase in health insurance premiums beyond what other pressures are applying to them in the next year or so. Is that your view? What can we do to control that inflationary pressure?

Mr Blackmore —The Consumers Health Forum does not really have the expertise to look at that level of detail. However, I would make the general comment that given there is an increase in people with private health insurance due probably to the Lifetime Health Cover, I would assume that the inflationary impact of these measures should be less than six and seven per cent.

Senator CHRIS EVANS —They are very brave assumptions.

CHAIR —Thank you very much for your time.

[4.29 p.m.]