Private Health Insurance Amendment Bill (No. 1) 2014

It is a great pleasure to follow the member for Shortland in this important debate. You could not find a more passionate advocate for the interests of health consumers in this country. It is an area of long-standing interest for the member for Shortland—indeed, before she came to parliament she was an allied health professional herself.

The bill before the House is an important one. It deals with private health insurance, the government's subsidies to the private health insurance industry, and how they can be managed in a sustainable way over the long term. It gives parliament the opportunity to focus on how we fund our health system and the role that private health insurance has in that funding arrangement.

Private health insurance is important. It costs the Commonwealth budget in terms of the rebate approximately $5.8 billion a year. That's right: $5.8 billion in 2014-15, which is a little bit less than 10 per cent of the Commonwealth's total health expenditure. It is right and proper that Commonwealth government and this parliament regularly focus on the performance of private health insurance and how much we are paying for this subsidy.

In terms of how private health insurance funds the contribution to total health expenditure in this country, it plays a very important role. The Commonwealth does the heavy lifting directly; nearly 41½ per cent of total health expenditure in this country is paid for by the Commonwealth; followed by states and territories at close to 27 per cent. It may surprise many on the other side of the House who are stern advocates for a price signal when it comes to access to primary healthcare services to learn that individuals already foot close to 18 per cent of total health expenditure in this country. Private health insurance is about eight per cent of the total expenditure on health insurance. So it is an important part—by no means the most important part—of health expenditure. At nearly $6 billion a year, it is something the parliament ought to focus on.

When this bill came before the House, it was met by a collective arching of the eyebrows from those on this side of the House, from each and every Labor member of parliament. That is because the subject matter of the bill is interesting. It was perhaps once seen as controversial by those on the other side of the House. It freezes the threshold for private health insurance rebate and the Medicare levy surcharge. The bill has the effect of reducing the amount of health insurance rebate that will be paid compared to if indexing were to occur as usual—that is, it freezes the rate at which the private health insurance rebate cuts out. It also—and this is not known by everyone—means that some individuals who would not pay the Medicare levy surcharge will pay that surcharge compared to if the surcharge was left alone.

Labor does support the legislation and we will support responsible measures, well-targeted measures, which are aimed at keeping health spending at sustainable levels, and I will go through some of the measures that Labor took in government. When Labor was in government, we introduced measures that ensured that private health insurance incentives were means-tested and made fairer. That was just one of the measures that we put in place.

At the time, those who introduced this bill before the House today opposed it most vehemently. When in opposition they opposed similar measures that we brought before the House. I have to say that, of the many vanities that we accuse the current government of, a dogged adherence to principles is not one of them; when you turn your thoughts to many of the things that were said in this place in 2012 in relation to Labor's fairer private health insurance legislation, you are left rolling around the floor laughing because there is such a gap between what was said then and what is being said by members opposite now in support of similar legislation.

The member for Flinders had this to say:

Significant numbers of consumers will withdraw from their private hospital cover—

1.6 million consumers over five years, he estimated—

or downgrade to lower levels of private health cover (4.3 million consumers over five years) following the proposed policy change.

So there you have it: the member for Flinders predicting a massive exodus as a result of the introduction of means testing for the private health insurance rebate. We know what happened, and that is the exact opposite. Private health insurance coverage rates continue to increase. In fact, they were at record levels when we left office.

But the member for Flinders, never one to be slowed down by facts or principle, had this to say:

That is the threat to the ability of low-income earners and middle-income earners to maintain their private health coverage.

He called Labor's reforms a 'retrograde step' in terms of public health policy.

He was not alone. I am very much looking forward to the contribution of the member for Leichhardt in this debate because when he comes here he will have to retract the things that he said in 2012 when he spoke on Labor's bill, which introduced the private health insurance rebate threshold. He had this to say:

I raise serious concerns about the grave impact these changes will have on our public health system, …

He called it 'blatant cost-shifting':

… blatant cost-shifting measure, shifting costs from the Commonwealth to the states' …

I welcome the comments that were made by the member for Leichhardt in respect of his concern about cost shifting. He did not have the same things to say about cost shifting when the GP tax legislation was before the House. In fact, we did not see him in there backing in the Liberal-National Party government's comments about the government's budget cuts through the tearing up of the health and hospital agreements, where the Liberal and National Party premiers said that there would be immediate impacts on front-line services.: from 1 July this year there will be a reduction of funding for 1,200 hospital beds across Australia. Where was the member for Leichhardt? Backing in his own LNP colleagues in Queensland, in New South Wales and right around the country when the serious criticisms were made about the government's policies.

There is more embarrassment for those on the other side. The then member for Barker had this to say—and I am always very concerned about the impact of any health measure on regional Australia:

Regional health relies on private health insurance. Visiting specialists to regional areas rely on both public and private patients. If the number of private patients drops off, which is inevitable,-

according to the member for Barker—

the visiting specialists will not visit anymore. Just on this fact, what does the government expect will happen if private health insurance is made more expensive? Of course people will drop out of private health. This means insurance will go up for those remaining in the system, weakening the health system not strengthening it.

You have to wonder, Mr Acting Deputy Speaker, whether the new member for Barker agrees with what the old member for Barker had to say on this measure.

I expect the member for Cowper to make a powerful contribution as well. He always does when he comes into this place. In 2012 in relation to Labor's legislation, he said:

If you were to lose your private health insurance, you may well lose your private hospital. If you lose your private hospital, you may well lose your specialists. If you lose your specialists, you lose the local provision of services and that is a bad outcome for all people in regional Australia.

I can just imagine the member for Cowper's contribution in the party room caucus: was he channelling the member for Cowper in 2012 or had he a conversion—a Damascene conversion—in view of the obvious facts? So while we welcome the legislation we are deeply cynical of those opposite; as I said at the outset, of the many vanities that we can accuse those opposite of, a dogged and adherence to principal and consistency is not one of them.

The reason that we are willing to support the government in the passage of this legislation is because we are willing to be consistent when it comes to this area of health policy. The private health insurance rebate legislation in 2012 achieved savings of around $3 billion. And despite the fear mongering of those opposite, we did not see a massive exodus from private health insurance in this country. In fact, those Australians who had private health insurance coverage continued to rise.

We need to have a look at the broader context for this legislation, because I have heard many speakers on the debate. I heard the member for Banks earlier, saying that the sole reason that this legislation is necessary and the reason why the Prime Minister had to abandon an article of faith—his promise to remove the rebates on private health insurance—the reason that he had to breach that firm promise to the Australia people, was because health spending was in a crisis and it had to be brought under control.

Unfortunately, the facts do not agree with the member for Banks or anybody else who mounts this spurious argument. If we have a look at what has happened to health spending we are told that 10 years ago the PBS spending was half of what it is today. And we are told that 10 years ago Medicare—the MBS—was 50 per cent of what it is today as well. But the facts are somewhat different. Ten years ago PBS was 3.2 per cent of government spending—that is right, 3.2 per cent of government spending. And if you expected a runaway break-out in costs for PBS—an important part of our overall health spending—you would expect as a proportion of government outlays for that to be three, four, five or six times what it is today. Unfortunately, that is not the case for those who put that spurious argument. In fact, it is less: 3.2 per cent of government outlays 10 years ago; just 2.3 per cent today—in large part because of tough measures that Labor put in place, including the accelerated disclosure regime, which was not always popular but necessary to rein in costs. Ten years ago, Medicare cost 4.8 per cent of government spending. Again, if you expected a galloping, out of control, unsustainable increase in health spending, you would expect it to be three, four or five times what it is today in terms of total government outlays. It is not. It has actually gone down, slightly—I do not make a big point of that—4.8 per cent of government outlays 10 years ago; 4.6 per cent today.

These spurious arguments that are put up by those opposite about the need to introduce a two-tier health system, where we effectively remove bulk-billing, where we put in place massive increases in the costs of medicine through changes to the PBS safety net, where we massively reduce the support that the Commonwealth is giving to the public hospital system and the state-run health and hospital system in this country—around $55 billion worth of cuts—are all built on a fabrication, and it is the Australian people who are going to pay for it.

You must have some sympathy for the Australian people, who are facing massive increases in the cost of their health care on top of one of the largest increases in private health insurance premiums that has been seen in decades—approved by this government, one of the largest increases in private health insurance premiums that we have ever seen. Far from being the champions and far from those who are moved by the DNA, the articles of faith and whatever else floods through their veins, what we have seen is inconsistency and broken promises. But we, on this side of the House, are not going to take an unprincipled approach to it. In government we supported similar provisions. In face of the opposition of those, we will support a similar measure here today. (Time expired)