Additional Comments by Coalition Senators

Additional Comments by Coalition Senators

This is the third significant change to private health insurance rebates proposed by the Rudd and Gillard Governments.

The means-testing change provided for in the Fairer Private Health Insurance Incentives Act 2012 and related legislation, is the only measure that has been implemented to date.

In relation to the means-testing change, the Private Health Insurance Administration Council found in The Operations of Private Health Insurers Annual Report 2011-12:

... in response to the reform, many insurers promoted prepayment options to maximise their customers’ opportunity to claim a rebate in respect of premiums paid. As a result, policy holders were able to ‘lock in’ premiums for up to the specified prepayment period, which saw prepaid premiums increase by $1.2 billion.

...the impact on policy holders’ choice in respect of cover will emerge as prepayment periods end.

Coalition Senators agree that detrimental effects on coverage rates and level of cover caused by the means-testing change and the subsequent proposed changes, including the Bill before the Committee, will not be known for some time. Current trends in private health cover do not accurately reflect the impact of changes that have been deferred through prepayments and others which have not yet been implemented.

The consequence of this Bill is likely to be to “increase the cost of obtaining private health insurance for consumers” as noted in the Explanatory Memorandum. It will affect people with private health insurance irrespective of age or income. As noted by a number of organisations, including Medibank Private, Hirmaa and National Seniors Australia, there are particular concerns about the long-term consequences for older Australians with fixed or lower incomes.

Coalition Senators also share the significant concerns of a wide range of stakeholders regarding the implementation difficulties associated with this measure.

The Bill will add significant complexity to the administration of private health insurance and have associated costs for insurers.

Coalition Senators would urge the Government to give more detailed consideration to alternative measures provided to the Committee, which may mitigate the administrative burden and implementation complexity associated with this Bill.

 

Senator Concetta Fierravanti-Wells

 

Senator Dean Smith

 

Senator Bridget McKenzie

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