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Monday, 10 September 2018
Page: 5819


Senator POLLEY (Tasmania) (12:20): I rise 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. Labor has a real plan to rein in soaring private health insurance costs by capping premium price increases at two per cent for two years, effectively tying them to general inflation. A Shorten Labor government will deliver real relief for the 13 million Australian consumers struggling with the cost of living. This strong policy will put an average of $340 back in the pockets of Australian families. That's only fair, given that wages are so low and private health insurance profits are so high. We're shifting the balance back to ordinary Australians.

For decades, Australians have been getting whacked by premium price rises that are double and even triple the rate of inflation. Families are now paying $1,000 more every year for private health insurance than they were when the Liberals came to power in 2013. Labor's policy will deliver the smallest premium price rises in decades. More than that, Labor's policy will deliver much-needed certainty so that Australians can plan their household budgets around these more modest increases—no more February surprises when the insurance companies say, 'Hey, your premiums will rise by four, five or even six per cent on 1 April.'

We believe private health insurance plays an important role in Australia's world-class health system. We're not looking to dismantle it. But this is an industry that gets $6 billion in taxpayer subsidies every year. Australians are entitled to demand a better deal. Alongside Labor's policy of an unprecedented two per cent cap, we will also order a sweeping Productivity Commission review of private health insurance. This inquiry will give us ideas on how to bring down the cost and improve the quality and value over the longer term.

In contrast to Labor's bold plan, the package the government announced in October last year is underwhelming. After two years of talking, the best the government could come up with was a range of mostly minor changes. They're really only tinkering around the edges, which isn't surprising given how closely the government collaborated with private health insurers in devising this package. The opposition welcomes the elements of the government's bills that strengthen the powers of the Private Health Insurance Ombudsman. We also welcome changes that allow insurers to cover travel and accommodation costs under hospital treatment products, in order to help people in rural and remote areas of Australia.

However, Labor has raised concerns with this legislation around the issues of maximum excesses, age based discounts and the termination of products. The bill before us allows insurers to offer maximum excesses of $750 for singles and $1,500 for families. This is up from $500 and $1,000 respectively. The government is trading higher excesses for lower premiums. We are concerned that consumers will opt for higher excesses they will not be able to afford to pay when care is needed, forcing them into the public system and further eroding the value of private health insurance. The bills also allow insurers to offer age based discounts to young people, requiring amendment to the Age Discrimination Act. Insurers will be able to discount hospital cover premiums by two per cent for each year a person is aged under 30, for a maximum of 10 per cent.

Labor fears this will be an insufficient incentive for individuals to take out private health insurance but expensive for insurers, possibly increasing premiums for others. Under these changes, a young person signing up to an average $1,800 policy will save only around 70c a week, not even enough money to buy one coffee a month. The change also undermines the important principle of community rating under which policyholders are supposed to pay the same premium for the same product, regardless of age. This hints at an Americanised model that would not be welcomed here in Australia. These bills will allow insurers to terminate products and to transport all people covered by these products to a new policy.

Labor is also increasingly concerned about the government's change to insurance categorisation laws. These rules are not detailed in these bills. Those details are apparently going to come later in the form of regulation. But this new system deserves some comment, nevertheless. The government claims its new gold, silver and bronze basic system will make private health insurance simpler and more affordable. It also claims that the changes will give consumers more clarity and certainty around their coverage. Labor support the idea of simplifying private health insurance policies so Australians can make more informed choices and we are certainly committed to delivering more affordable insurance. However, we note there is growing anxiety about the government's changes amongst patients, clinicians and industry groups. Most recently, a number of stakeholders have expressed concerns that people suffering from chronic pain will only be covered if they hold the most expensive gold level of coverage. One in five Australians will suffer from chronic pain in their lifetime. Many of these people are already missing out on treatment that could improve their health and quality of life. We are concerned the government's changes will make life even harder for many of these people.

How does the government justify this? What is the government doing to make sure people with chronic pain aren't left disadvantaged through either higher premiums or poorer coverage as a result of these changes? Will people be forced to pay more to maintain their current level of coverage or will they be forced to accept a lower level of coverage because they cannot afford to upgrade? Either way, we are concerned this may have the unintended consequence of accelerating the private health insurance extras that are putting the entire industry at risk.

The Senate inquiry we initiated has not entirely allayed our concerns on these issues. However, on balance, we will not oppose these bills, but we will closely monitor the impact of these measures and we hope they will not have unintended consequences. Ultimately, we do not believe these bills will deliver significant savings to Australian consumers. That's not just us saying that. Groups like the AMA and some of the health funds themselves have said the same thing. Having said that, we believe that Australians need and deserve every bit of price relief they can get.

I would also like to foreshadow Labor's position on the Greens second reading amendment. Labor do not share the Greens' position on the private health insurance rebate. We recognise it is an important incentive for some people to maintain private health insurance coverage. However, we have already announced that a Labor government would refer the entire private health system to the Productivity Commission, with a focus on affordability and value for consumers. Labor will therefore support this amendment. I move:

At the end of the motion, add "but the Senate condemns the Government for putting insurer profits before patients, forcing Australians to either drop their private health insurance, or pay more and more for less and less".