Health insurance changes removes rebate for lifetime loading

The Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 before the House is not a health bill at all.

It is not concerned with providing health services to the people of Australia.

The reality is this is actually a Treasury bill. It is concerned with an illegitimate government and its dodgy smoke and mirrors budget. It actually should be being presented by the Treasurer, certainly not the Minister for Health, and we should be discussing the $386 million that the government is planning to claw back out of the hands of those Australians who take responsibility, who are directly concerned with their health and who invest in their own health.

However, since the Labor government is prepared to use this duplicitous manner, we will discuss the impacts of this measure on the health of the Australian people.

The bill amends the Private Health Insurance Act 2007 to remove the private health insurance rebate from the lifetime health cover loading. We should take note that the explanatory memoranda of the bill trumpets it proudly that the intention of this bill is to ensure that all recipients of the income-tested rebate receive a comparable benefit relative to their premium cost disregarding any lifetime health cover loading that applies.

This statement, I believe, could be straight from the lines of Sir Humphrey in Yes Minister. It is a Labor government sugar coated spin—one thing we are used to—way of telling us that this government is actually slashing the rebate received by private health insurance holders—ordinary Australians.

The government is actually trying to convince private health insurance holders that they will be better off when they say that all recipients of the income tested rebate receive a comparable benefit relative to their premium costs.

The reality is far different. For Australians who did not take out private health insurance before their 31st birthday and who will therefore have to pay the additional fee imposed, the lifetime health cover loading cost will not be rebated.

This means a reduced rebate for the consumer whose private health insurance will actually cost them far more. In fact, it is reported it will increase premiums from 10 to 27.5 per cent on July 2013, directly affecting—as we know—lower-income Australians and the 67,396 with private health cover in my electorate of Forrest.

Of course it is going to be the government that makes the most money out of this deal, not the Australian citizen, yet the government has the dreadful gall to hide this fact in what is deceptive prose.

It might be argued by those opposite that it improves the incentive to take up private health cover but in reality this is again—as we are used to with this government—a spurious and misleading argument. It implies that there is not a sufficient incentive now to take out private health insurance.

The government in its explanatory memoranda to these private health insurance bills implies there is not sufficient incentive now to take out private health insurance. Presumably, the Lifetime Health Cover loading is not an adequate incentive and a bigger stick is required.

This is a duplicitous approach, showing a lack of understanding and utter disrespect for the Australian community.

Does the government not understand that young people in their 20s often struggle to pay their bills? Is the government of the view that everybody who needs private health insurance can afford it at all times or is it the Labor position that those young people, like low-paid workers or students, who get through their 20s do not need any private health insurance later?

These people are already punished for their poverty once with the Lifetime Health Cover loading. Now the Labor government seeks to punish them again.

Some 5.6 million people in Australia with private health insurance have an annual household income of less than $50,000 and 3.4 million have an annual household income of less than $35,000.

We really do need to remember those repeated Labor promises to rule out any changes to the private health insurance rebates. In a letter the Prime Minister wrote to one of the newspapers, she said:

The truth is that I never had a secret plan to scrap the private health insurance rebate …

For all Australians who wanted to have private health insurance, the private health insurance rebate would have remained under a Labor government. I gave an iron-clad guarantee of that during the election.

What value do we place on those promises today, like so many other Labor promises?

The Labor Party, led by the nose by union bosses and the Greens, repeatedly demonstrate that private health insurance is something they morally oppose.

This should probably surprise nobody, because the Gillard government opposes all things private be it private health, the private school system and, what we have seen in the last few years, the entire private business sector.

However, this ideological drive comes at the expense of the goals and aspirations of Australian working families. Some principles apply and really need to be recorded. Parents who send their children to private school receive less in total government investment, both state and federal, than those who use the public system.


This means that every parent who is paying private school fees is subsidising by default the public education system and the students who are in it.

Workers in private industry pay the taxes that pay the wages of those working in the public sector, and those Australians who invest their hard-earned dollars in private health insurance subsidise the public health system and all those patients who rely on it.

Does this deceptive government really have to keep attacking those who are personally investing in their own education, their own industry and their own health, those who are taking personal responsibility and often going without in other key parts of their lives because health is so important to them? Why is this issue of taking personal responsibility such an anathema for Labor?

It clearly is, given the government’s open assault on those who do so. Everyone other than this government knows that every person who pulls out of private health insurance adds to the cost of the public health system, yet this government seeks with these bills to provide another disincentive.

Making private health insurance more expensive naturally drives more people out of it. According to the government, this will save it $386 million over the next three years. Of course it may well cost the government and therefore the Australian taxpayers more in the longer term as more Australians slip out of the private health system and rely on the public system.

We just see this as part of the government’s dodgy budget figures, one of their short-term fixes. We have to remember that it is not, as I said in the first instance, a health action; it is a short-term budget fix.

The proposed $1.5 billion surplus at this point is a $19.4 billion deficit, and that is not the end of it.

We are not at the end of the financial period yet. This is the only reason for this bill and this action by the government.

The government claims that the change will be ‘an incentive for a person to take out private health insurance earlier in their life and maintain cover to avoid the LHC loading’. Such an incentive already existed under the LHC loading.

This new imposition is simply another penalty. So to avoid being hit with an LHC loading, people currently must hold appropriate hospital cover before they reach what is defined as their LHC base day—usually 1 July following their 31st birthday.

According to the government’s Australian Institute of Health and Welfare, total expenditure on health goods and services in Australia in 2008-09 was estimated at $112.8 billion.

Recurrent expenditure was $107.1 billion or 94.9 per cent of total expenditure, which equated to nine per cent of Australia’s GDP. Of that funding, $49 billion came from federal government funding and $30 billion from state government funding.

The remaining $34 billion was privately funded and included $19 billion paid by consumers themselves in using services, $6 billion from other nongovernment sources and $9 billion from private health insurance funds. According to the Private Health Insurance Administration Council, as at June 2011 private health funds were paying out $15 billion in health benefits to provide for the needs of the nearly 12 million Australians who carry private health insurance.

That is over half the Australian population. Of these, some 10 million have hospital cover, which accounts for about half of the costs.

More recently the Private Health Insurance Administration Council has found in the five years to 2012 that ‘exclusions and restrictions have become much more prevalent’ and that the increased use of exclusions ‘may work against the policy objective of private health insurance in easing the burden on public hospitals’.

An Econtech report said that every dollar of funding provided for private health insurance rebates saves $2 of costs that are then paid by private health insurers. Yet this government continues its attack on private health insurance, undermining it yet again with the bills before the House today.

The coalition, as we know, has been a strong supporter of private health insurance. We know that these bills add even more complexity to private health insurance and will raise premiums, including for those Australians on lower incomes.

We are a friend of private health insurance and have demonstrated this directly. We recognise the benefits it provides and are not ideologically opposed to personal responsibility, such as we see with the Labor Party and the Greens. The bills before the House are simply more evidence of that fact.

I will just remind people who may be interested in this debate that the government has repeatedly made commitments that are then reneged on. Remember that Nicola Roxon, then the minister for health, said in 2009:

The government is firmly committed to retaining the existing private health insurance rebates.

So the average person out there believed this. Even Kevin Rudd at a press conference in February 2008 said:

The Private Health Insurance rebate policy remains unchanged and will remain unchanged.

As I said, the Prime Minister herself has on more than one occasion confirmed her commitment, and has even in letters to the editor indicated that this was a ‘rock solid, iron-clad guarantee’.

It certainly would not appear that way to anybody who has private health insurance at this time. Unfortunately, it is just a repeated pattern by this government to make commitments to the Australian people, and we certainly remember the most famous one—’that there would be no carbon tax’.

Well, as far as private health insurance is concerned, this is the same type of promise; it is just the latest broken promise.

We know, because the Australian people tell us out in our electorates that they simply do not trust anything that this government says. And of course we have the evidence. The evidence is in front of people. They see repeatedly that they simply cannot trust anything that the government says.

I do know how important people take their health to be. I see people in my electorate—like so many other members do—who go without the simple, most important things in their lives just to be able to afford to pay their health-insurance.

It is probably one of the most important issues in people’s lives, particularly as they age, but even for young people who may have some form of medical problem early on in their lives.

We know that health-insurance and health are often people’s No. 1 priority. I know that there are people in my electorate who face a number of medical challenges right at this moment. I do know how important having private medical insurance has been and is to those people who are facing these types of challenges in their lives.

The average person who goes out of their way to take personal responsibility and take out private health insurance is in no doubt as to how important it is. It is not only important to them but it is important to the whole health system.

When you talk to people, there are very few things in their lives that are more important than their access to the health services they need when they need them most, particularly if they are facing a serious health challenge.

In rural and regional areas this is never more apparent. I conclude my remarks on those points.