Dissenting Report of the Australian Greens
The Australian Greens are committed to equitable access to
quality public health care. In considering the impact of this Bill, the
Australian Greens have differentiated between the impacts on the public health
system and the impact on the private health insurance industry. It is our
primary concern to ensure that Australia has a strong, viable, accessible
public health system.
Professor Leonie Segal's evidence to the Committee indicated
the extent to which the support of the private health insurance industry is
draining tax dollars from the public hospital system. The cost of the 30 per
cent rebate, for example, which is currently an estimated $3.6 billion, must be
contrasted with total federal government expenditure on the public hospital
system which in 2007/8 was $9.7 billion.[1]
'Translated another way, if we were not supporting private
health insurance and those dollars were available to go into health in other
ways, they could be used to increase the commonwealth contribution to public
hospitals by one third'.[2]
The Australian Greens share Professor Segal's concern and
believe that it is not the role of the taxpayers to subsidise companies providing
private health insurance.
The Medicare Levy Surcharge forces people on low to average
incomes to contribute at the same rate as those on much higher incomes. The
Australian Greens value the principle of equity. This is an unfair burden on
households currently struggling with other costs. The failure to index this threshold
means it now captures households earning low to average incomes. As Choice
argued in their submission to this inquiry, based on average weekly earnings,
incomes have increased by approximately 60 per cent since 1997 when this
threshold was first introduced.[3]
The Australian Greens argue that people should have a right
to choose whether or not to buy health insurance. The Medicare Levy Surcharge
penalises people who have chosen not to take out private health insurance.
Additionally, it removes the incentive for private health insurance providers
to provide the most attractive products.
Modelling the impact of changes to the public health system
The Australian Greens considered in detail the modelling
provided to the Committee.
However, rather than providing a convincing argument, the
wide variation in the models highlighted the difficulties of making accurate
predictions about the impact of this measure.
In summary, the private health insurance sector argued that
the raising of the Medicare Levy Surcharge threshold would lead to a drop in
the number of privately insured which would then impact on waiting lists for
public hospitals. The sector further argued a second round impact of rising
premiums as the number of insured decreased. However, the figures provided to
the Committee varied considerably.
For example, the Australian Health Insurance Association
estimated a first round loss of 908,000 people or almost 10 per cent of
members. The much lower figure of 359,000 people was estimated by Access Economics.
The estimations of second and third round effects on private health insurance
memberships were similarly varied. This variation indicates the differing
assumptions made regarding the decision to purchase private health insurance
and undermines the claims of the private health insurance sector of a large
impact on public hospitals.
There is clearly some potential for people who drop their
private health insurance to add to the elective surgery waiting lists of public
hospitals. However, while the private health insurance industry placed
considerable weight on the price of insurance as the determining factor in the
decision people make to purchase insurance, the more qualitative assessment
provided by Professor Elizabeth Savage, Ian McAuley and other submitters to the
inquiry included a greater range of reasons why people choose to hold health
insurance including peace of mind, planning for the future and a sense of
security.[4]
In line with this qualitative assessment, Professor Deeble
also argued that factors other than price were greater determinants of the
choice to hold private health insurance. His modelling took this position into
account. In summary, Professor Deeble calculated an increased demand of
approximately two per cent per annum on public hospitals. Out of a total public
hospital expenditure of approximately $26 billion, this would be an extra $360
million per year.[5]
The Australian Greens were concerned that the evidence from
the Department of Health and Ageing indicated a lack of modelling of the
impacts of this measure on the public health system. This is illustrated by the
following exchange.
Senator SIEWERT—Okay. Thank you. You have not done any modelling
of the impact on the public health system?
Mr Kalisch—No. We have looked at the range of issues and, as I
was mentioning to Senator Cameron, talked about and looked at a range of the
other factors that would also be impacting on public hospitals in the way that
they are managed by states and territories, as well as the additional funding that
the Commonwealth government has provided to them, and come to a policy
assessment that we would not expect anything more than a modest change.
Senator SIEWERT—Part of this comes down to what impact this is
going to have on the public health system. I want to be assured that the
additional money going into the public health system is going to cover any
impact of changing this threshold. None of the information you have just given
me assures me that there is enough money in the system to deal with even a modest
impact when hospitals are struggling as they are. I would have thought that the
increase the government has given in the budget would have been to make up for the
fact that the public health system is struggling as it is—without even the
modest impact of this change.
Some insurers and some health providers are saying it is not
going to modest but rather six per cent, and I will get to the Catholic health
service modelling in a minute. How can we be assured that in fact even a modest
impact is going to be covered by the increases the government is giving to
public hospitals?
Mr Kalisch—There are two aspects. One is what government has
already announced. They have already announced at least $1.1 billion of extra
funding to public hospitals.
Senator SIEWERT—With all due respect, my question still stands:
how do I know that that is actually going to deal with the increase in the
public system?
Mr Kalisch—The other aspect which I cannot really give you a
number on is what I referred to earlier—that the federal government is talking
to the states and territories at the moment about the next healthcare agreement.
That is going to be the vehicle for potentially more money going into the
public hospital system.
Perhaps I will reframe that. Really, the issue that is being
discussed is: how much more money is going to go into the public hospital
system? It is really about what the number is going to be at the bottom of the
page.
Senator SIEWERT—That is the crux for us. We will be coming to
make a decision in the Senate about this. I want to be assured that if this
passes there is enough money to deal with the impact on the public health system,
and quite frankly nothing you have told me yet reassures me of that.
Mr Kalisch—I suppose I can give you the assurance that on the
basis of the numbers that we know are being discussed and our assessment of the
impact—
Senator SIEWERT—With all due respect, you have just told the
committee that in fact you have not done any modelling on the impact on the
public health system.
Mr Kalisch—No, I said we expect that number to be quite modest—
Senator SIEWERT—I understood you as saying you have not
modelled.
Mr Kalisch—and I said we cannot do any specific modelling.
Senator SIEWERT—You have not done any modelling, so we do not
know whether the figure that, for example, the Catholic health system are
saying of around a six per cent increase is correct. I am not here defending
the Catholic system, but I am just saying that they are the figures that are
out there publicly, as well the Access Economics figures. They are saying six
per cent. How do I know that they are not right?
Mr Kalisch—I think we can certainly point to some of the major
difficulties around their assumptions. A number of those assumptions about a
very big impact on the public hospital system make some fairly heroic assumptions
around a very high proportion of those who drop out of private health insurance
requiring public hospital treatment, which is completely out of kilter with
what we see even in the broader population. I think the chair talked about some
suggestion that younger people may be more likely to drop out of private health
insurance as a result of this change. If that is the case, they are not the
sort of people that turn up to public hospitals for admitted procedures.
CHAIR—We are short of time.
Senator SIEWERT—I will ask my final question. The issue that has
been put is that it is not just the immediate impact now but also the
subsequent impact. I take the point that young people dropping out are not going
to be turning up in hospital necessarily straight away. But, in subsequent
years if they have not then gone into the lifetime process that we have been
talking about, have you modelled or looked at what impact it is going to have
on the public system in subsequent years?
Mr Kalisch—No, we have not in that level of detail. I would have
to say that the modelling is almost impossible to do around that dimension.
What you have seen is a number of commentators and submissions suggesting a
significant impact within a very short space of time. They are not looking at a
change over five or 10 years. They are looking at a change within one or two
years. It is hard to quite get to all of the assumptions behind their so-called
modelling. I would have to say they are more using assumptions and then driving
some numbers through them, but their numbers seem to imply that a very high
proportion of people who would be dropping out of private health insurance do
turn up at public hospitals.[6]
The question of accurate modelling for the impact of this
measure on the public health system is critical. We appreciate the difficulties
associated with modelling the second and third round effects, however, a
responsible government must have in place monitoring systems that capture and address
any increase in demand on public hospitals resulting from this Bill. Waiting
lists are already too long. The increased demand on the public health system
flowing from this Bill may be as little as two per cent overall, but when added
to an existing backlog of patients, it is an additional burden that must be
addressed.
The impact on the private health sector
The Australian Greens concur with the Majority Committee
Report that the drop out rate from private health insurance as argued by the
industry is likely to be exaggerated. On the possible rise in the cost of
premiums for private health insurance, we argue it is difficult to make an
assessment given that the price of premiums is an outcome of less than
transparent commercial decisions. As Professor Deeble noted in evidence to the
inquiry, the impact on households of raised premiums may be as little as a
dollar a week. Our major concern is that tax payers should not subsidise the
private health insurance market. As argued by Choice, consumers will now have a
greater capacity to choose whether or not to become members of a fund and
greater pressure will be placed on funds to provide appropriate products for
consumers (Submission No. 11).
The impact on non government public hospitals
The potential impact on public hospitals operated by the
private sector was not discussed in any depth by the Committee’s Report. The
Australian Greens have some concerns for the impact on non government public
hospitals, (including those run by Catholic Health Australia) particularly
those in regional areas that offer services not adequately provided by the
government and those that use income from hospital activities to cross
subsidise community outreach programs such as drug and alcohol rehabilitation.
The impact on individuals
One reason that this Bill is creating so much concern is the
failure to index the threshold when it was introduced in 1997. While the Greens
in principle oppose the existence of the Medicare Levy surcharge and the
rebate, we argue that it should be indexed from this point on to avoid this
same problem recurring in the near future.
Conclusion
While the Australian Greens are in agreement with the
Majority Report of the committee that lower income households must be protected
from being forced to pay the Medicare Levy Surcharge, we do not accept the Committee’s
recommendation that the Bill be passed in its current form. Rather, we
recommend the following:
Recommendations
Recommendation 1
That the savings from this measure are redirected to the
public health system.
Recommendation 2
That the Bill be amended to index the Medicare Levy
Surcharge threshold from this point on to avoid further lumpiness in future
policy changes.
Recommendation 3
That the Bill include a requirement for an ongoing review of
the elective surgery waiting lists in the public hospital system to assess the
longer term impact of this Bill.
Senator Rachel Siewert
Australian Greens
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