PARLIAMENT HOUSE, Canberra: I rise also to speak on the Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012 and the cognate bill in front of the parliament today and express my grave concerns in relation to them.
These bills represent another hit to the private health insurance rebate by the Rudd-Gillard government. They have already means tested the private health insurance rebate, which experts recommend will put up premiums by 10 per cent across the board. With these bills, the lifetime health cover loading will no longer be covered by the private health insurance rebate. Secondly, the rebate will be worth less each and every year once the new indexation arrangements are brought in.
For a government that promised time and time again not to alter the private health insurance rebate, they have now ripped about $4 billion out of it and have made things tougher for families.
For those who are not aware, the lifetime health cover loading was introduced by the Howard Government as part of package of reforms aimed at increasing the uptake of private health insurance, particularly for younger people. It is a loading on private health insurance premiums that is applied at a rate of two per cent for every year that an individual over the age of 30 takes out hospital cover, and a cap of 70 per cent is applied. It is intended to ensure that people take out private health insurance at an early age and maintain their cover.
Currently the government pays the private health insurance rebate on the total value of the premium paid by the policyholder, including the loading component. This first bill will cease that arrangement.
The second bill takes a further hit to the private health insurance rebate. It effectively reduces the value of the rebate each and every year. As you would be aware, it is a 30 per cent straight health insurance rebate presently. But the impact of this second bill is that, over the years, it will effectively reduce from 30 to 29 to 28 to 27—and keep going.
I do not support these bills and will not be voting for them. I would like to outline, in the time I have available today, why I do not support these two bills. In essence, I can summarise it by saying this: the legislation will put up prices; that means that people will drop out of private health insurance; if people drop out of private health insurance that puts more pressure on the public health system, which is already under pressure; and, fourthly, it is a broken promise—another one—from this Labor Government.
If I come to that first point, the impact of these two bills is that the prices of private health insurance will be put up for everyday families across Australia. If there is one thing that people are concerned about in our community today it is cost-of-living pressures. They see their electricity bills go up, they see their gas bills go up, their water is going up, their rates are going up, child care is going up. Many of these things are going up because of government policy: through additional regulations, things like the carbon tax and, not content with putting up those other costs, through these bills which will put up the cost of the private health insurance.
There are 1.2 million people across Australia who are subject to a lifetime health cover component. That is about 14 per cent of all people who take out private health insurance, and in my electorate that translates to 12,000 people. For each of these 1.2 million people, their costs for private health insurance will rise for the simple reason that that loading will no longer receive the rebate. It is very straightforward: that loading will no longer receive the rebate, which means their costs will go up.
The industry believes that this measure alone will put costs up by an average of 10 per cent and for some people it will be up to 27 per cent. Further, the lifetime health cover will no longer be removed after 10 years, short-changing those who have, in good faith, been waiting to have their loading removed. That is just the first bill.
The second bill applies across the board to every single private health insurance policyholder because that bill, the Private Health Insurance Legislation Amendment (Base Premium) Bill, has the effect over time of reducing the amount rebatable. As I said earlier, everybody knows that it is a 30 per cent private health insurance rebate. But the effect of this bill—even though it does not expressly state this—is that over time that 30 per cent will be reduced every single year and will continue to be reduced.
The mechanism the government has for doing this is an indexation mechanism whereby the government’s contribution to the private health insurance rebate would be indexed annually by the CPI rather than by the increase in actual premiums. Quite frequently, there are two to three percentage points difference between those two measures, between the CPI—which, as you would know, Madam Speaker, is targeted between two and three per cent—and the cost increases of actual premiums, which are frequently five to six to seven per cent per annum.
That difference makes all the difference on this occasion. What it effectively means in plain English is that the rebate is worth less every year. That means that out-of-pocket expenses for every single family across Australia that has private health insurance will go up. Make no bones about that. There are approximately 85,000 people in my electorate who have private health insurance. About 70 per cent of all families take out private health insurance.
What happens if out-of-pocket expenses for private health insurance go up? The simple answer is that many people will drop out. That is the simple answer. They will not do so immediately, and many people will try to hold on to their private health insurance cover for as long as possible, because—as you know, Madam Speaker—people want private health insurance for the peace of mind of being able to get their own doctor or their own specialist and being able to go to the particular hospital that may be near them, such as the Knox Private Hospital in my electorate. They will do everything they can to maintain their private health insurance for as long as possible. But if the prices continue to go up, as these bills will cause them to do, some families will simply have to drop out of private health insurance.
Labor would have you believe that it is only the wealthy people that take out private health insurance, but that is simply wrong. If you look at my electorate alone, 70 per cent of people take out private health insurance. I live in a very middle-class electorate. It is Middle Australia, and 70 per cent of people take out private health insurance. When you look at the annual statistics, 5.6 million people with private health insurance have an annual household income of less than $50,000, 3.4 million people have an annual household income of less than $35,000, and they take out private health insurance. Those families on that sort of annual income are already struggling with the increases in electricity prices, in gas prices, in childcare prices, in their rates, in water prices and in all of the other things which are going up well in excess of inflation.
These bills are just going to make it so much harder for them, and I think that, particularly for those low-income families, many of them will have to drop out. They will have to drop their private health insurance because they can simply no longer afford to keep it.
If people drop out of private health insurance, what does that mean? It does not mean they no longer have health problems. That is preposterous. What it means is that, instead of going to the private hospital, they go across to the public hospital. As you know, these public hospitals are already stretched to capacity. There are already long waiting lists at public hospitals, and the waiting lists in part got longer because they had $1.6 billion of cuts made to them in the last midyear financial update, last December, as the Shadow Minister for Health has pointed out. How are these public hospitals supposed to cope if even a small number of the people who are currently covered by private health insurance drop their cover and then go into the public system?
When you look at the procedures that are done in the private hospitals, it is quite incredible—78 per cent of knee procedures are done in private hospitals, as are 81 per cent of same day mental health treatments, 60 per cent of cancer therapy and 57 per cent of hip replacements. One has to ask the question: what happens if all of those surgeries and operations have to be done in the public system? The public system will not cope and it just means longer waiting lists for those in the public system who are waiting for their knee procedure. There are longer waiting lists for those people who are waiting for a hip replacement.
My final argument as to why I will not support these bills is because this is a further broken promise by this government. Look back through the transcripts, the comments and the promises which the Labor ministers have made going back for the last eight years, starting in 2004, then in 2005, 2006, 2007, 2008, 2009. Every single year, the Labor ministers, the Labor government and Labor in opposition promised that they would not touch the 30 per cent private health insurance rebate. Nicola Roxon said in February 2009, plainly, simply and unambiguously, very clearly:
The Government is firmly committed to retaining the existing private health insurance rebates.
Steve Lewis asked her, as health minister at the time, on Meet the Press earlier:
So you will not wind back that 30% private health rebate, despite the fact that Labor has been ideologically opposed to it in the past?
No, we won’t.
It does not get much clearer than that. Labor promised through thick and thin that they would not touch the private health insurance rebate. They did so because they know how many people rely upon that rebate to make private health insurance affordable for them. This is another broken promise. That is what these bills represent.
The Australian public is sick of broken promises. They are sick of having the carbon tax which was promised to never come in. They are sick of the fact that billions of dollars are spent now on border security, despite a promise not to unravel that system. They are sick of all the other broken promises which they have to put up with. They should not have to put up with further broken promises in these bills.
In the last minute or so maybe I should address the question why the government is putting forward these bills. Given they are going to put up prices for families, given it is a broken promise, given that it is false economics because it will just put more pressure onto the public system, why is the government going ahead with these two bills? There are two simple answers to this.
The first is that they have always had an ideological objection to the private health insurance rebate scheme. Steve Lewis, a very respected journalist, noted that in his comments and his questions on Meet the Press that I referred to earlier. We know that Labor do not like it and they never have. They have supported it through gritted teeth on the eve of elections but they do not like it.
The second reason that we have these bills is because Labor have completely blown the budget, that they are now in such a financial mess that they are looking for every avenue to try to make savings.
These are bad bills which we will not support. The private health insurance rebate is part of the Coalition’s DNA and, should we win government, we will seek to restore the full rebate as quickly as the budget allows.