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Tuesday, 23 May 1972
Page: 1895

Senator Douglas McClelland (NEW SOUTH WALES)

Does the Minister for Health recall his predecessor in the Senate stating on 7th May last year that the rates of contribution to hospital and medical benefit funds had been set at that time to enable a reduction of excessive reserves? Did the Nimmo Committee and also the Senate Select Committee on Medical and Hospital Costs recommend that these organisations be required to restrict their free reserves to specified limits, and in the case of the larger funds to an amount equal to 3 months' contributions? Will the Minister agree that the latest figures published by his Department indicate that hospital fund reserves are running at a rate equivalent to 8.4 months' contribution income? Will the Government consider reducing contributions, at least to hospital benefits funds, in order to take up the excessive reserves held by the hospital benefit funds?

Senator Sir KENNETHANDERSONSome of the questions posed by Senator Douglas McClelland by way of preface would be quite accurate in the generality of the matter. In fact the Government made a deliberate decision, which as I recall accorded with a recommendation in the Nimmo report, that there should be a reduction in reserves held by the funds, notably the hospital funds, and it set about to implement that decision. As a result, added benefits have been provided in a variety of ways by the hospital funds and reductions have been made in cetain instances in payments by subscribers. Senator Douglas McClelland has confused the situation a little by referring to a document which I tabled last week relating to the operations of registered hospital and medical benefit organisations for the year 1970-71.

The decision in relation to medical funds is operative and is reflected in the document that I presented - particularly in relation to the medical funds whose reserves significantly are not high. But I remind the honourable senator that the decision of the Government was pitched or geared to a situation in which the States did adjust their hospital charges. The concept of reserves to meet 3 months' requirements is distinct from the situation in the old days when 9 months' reserves were held.

The figures in relation to reserves in respect of hospital funds are not to be found in the document that I presented, which related to the period ended 30th June 1971. The decision to lower reserves held in respect of hospital funds did not come into effect until after that period. The decision was taken, because of the reasons that I have given to the honourable senator, that this policy would be introduced at a time when the States increased or varied their funds. The policy in respect of medical funds was implemented in July 1970, at which time a major reconstruction of the medical benefits scheme was undertaken. The result was that action was not taken in relation to hospital fund reserves until after 1st July 1971. So, the results of that action are not reflected in that figure.

I am most grateful to the honourable senator for giving me the opportunity to bring the point out. The policy of the Government is quite clear. The reserves held in respect of hospital funds must be reduced. Subscribers to those funds get the benefit of the reduction iri the form of additional treatment, a wider range of treatment, or, in certain circumstances, some reduction of their payments in respect of fund tables.

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