Interview with ABC Illawarra on Private Health Insurance

MELINDA JAMES: Do you agree that private health insurance in this country needs to be reformed? There are problems if people are paying for policies that are basically worthless. Do you think that there does need to be reform?

STEPHEN JONES, MEMBER FOR THROSBY & SHADOW ASSISTANT MINISTER FOR HEALTH: Look, there are a bunch of issues that need to be looked at. 

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Whether that is transparency, which is people getting what they think they have paid for. Whether that is availability of services where people live, including regional and rural Australia where private health insurance is very low. There is a very good reason for that – the private services aren’t out there. So there are a bunch of issues that need to be looked at, including affordability. But I have got to say, I am very concerned about any initiative which is going to have us move away from a community rating system. In plain speak a community rating system involves preventing discrimination in the offering of private health insurance policies in this country. It’s an important foundation principle. I’m concerned that the poll put out over the weekend is laying the groundwork for them to do exactly that. To enable them to discriminate on the basis of background, on gender, a whole range of things of different things. I don’t think that that is reasonable –

JAMES: So the community rating system, that is basically that everyone pays the same for their health insurance policy regardless of whether you smoke or your health status at the time. You also can’t be refused any sort of policy from any company, they can’t refuse you on the basis that you have a certain heritage, that you might have some of genetic proposition and –

JONES: There is a very good reason for that. Let’s focus on what the reason for that is. Quite apart from the insurance principles of spreading risk, there is a penalty in Australia if you don’t take out private health insurance. There is a tax penalty. So to put in place as the Howard Government did a tax penalty for people who don’t take out private health insurance and then to say to the private health insurance industry you can discriminate against various people in the premiums you offer; we don’t think that that is far.

JAMES: The Health Minister, Susan Ley, does argue the point that the survey is about trying to find incentives not excluding people from health insurance policies. I mean that is a reasonable argument, isn’t it? She has had young people come up to her and say – I keep fit, I don’t smoke and I do the right thing, why can’t I pay less than people who pose a bigger burden because they do smoke, they don’t exercise and they are overweight?

JONES: There is a fixation on smoking. You shouldn’t smoke, it is bad for your health and we all know that. We could treat the Government a lot more seriously on this issue if they didn’t rip $130 million out of anti-smoking programs in their first Budget. So their form in this area is not that good, in fact in the whole preventive health and healthy lifestyle area they have not got a good health record. So we need to be a little bit sceptical about what they are saying in this area. Now the issue about whether private health insurance should be more affordable. Yes of course it should, it has gone up in record amounts over the last three years when this Government has been in power. There is no doubt about that, the facts speak for themselves. What we won’t be a party to is moving away from that fundamental insurance principle, which has been at the heart of the private health insurance industry in this country for decades, that is community rating. You might start with one group, pretty soon you will move to other groups in the community. This is not an academic issue. There is a legal case going on in a tribunal in Victoria at the moment, which is taking to task private health insurance companies which are refusing to cover various mental health conditions. So if you start excluding one condition, where do you stop? It is not an academic issue, it is actually happening at the moment and that is why we have deep concerns about it.

JAMES: But I guess when it comes to smoking, something that clearly based on decades of evidence now has a huge impact on health and leads to a huge number of costly treatments down the track, it is within your power to stop and –

JONES: I agree that people shouldn’t smoke and we should be doing everything that is right, reasonable and fair to dissuade people from smoking. But let’s interrogate the issue for a bit. Somebody who has a couple of cigarettes down the back of the oval at 16, doesn’t declare it in a private health insurance policy, are they excluded or penalised down the track when that is discovered? How do you work around these practical issues? What about someone who has smoked for a few months but then gives up, they saw the error of their ways. Are they discriminated against or are they penalised down the track? How do you design a system, for example, that doesn’t dissuade people giving up? All of these things sound very simple at first blush, when you start interrogating them and asking how will that actually work? Suddenly, they don’t seem very good in practice.

JAMES: What about some of these other reforms that are being talked about? The Health Minister, Susan Ley, said yesterday that she might consider [inaudible] subsidies which are currently provided for those extras like dental and optical services because they might not be the best value for money. Or looking at allowing private health insurers to cover GPs or x-rays, things which they don’t currently cover.  How do you feel about those potential reforms?

JONES: Let’s look at these on a case by case basis. Late last year and in fact in government we said that there were a bunch of services which were effectively being subsidised by the taxpayer which had a dubious scientific basis. Whether that was aromatherapy or a whole bunch of other things. If people want to pay for that out of their own money that is fine, but it shouldn’t be subsidised by taxpayers through private health insurance rebates. Looking at those things makes a lot of sense. You ask about whether we should have gap insurance for GP visits, basically the gap between the Medicare rebate and what the Doctor is charging. I’m not attracted to that. Stephen Duckett, one of the pre-eminent health economists in this country, wrote an interesting piece in the Sydney Morning Herald which I think nails it. What the evidence suggests will happen is that you will see inflation. You will see inflation in terms of what Doctors actually charge. There are good reasons why some of these systems where put in place right at the very beginning. Labor won’t support that proposal but there are other issues we are willing to look at, some of these therapies that have little scientific basis or no evidentiary basis as to whether they will have a good outcome. I think we should look at them with a fine-tooth comb.

JAMES: There is the other potential outcome, that private health insurance companies insist you see certain GPs as well?

JONES: That is something that managed care arrangements have, they are in place in the United States. That is a system we do not want to duplicate it. That is just another reason we don’t want to go down the road of opening up GP services to private health insurance. Indeed, there were trials put in place last year, Medicare Private put in place a trial in Brisbane and they stopped it very quickly. There is a reason for that, it wasn’t working.

JAMES: Stephen Jones, thank you for your time.

JONES: Thank you. 

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