Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

This is one of the few Labor MPs who, when he runs out of material from his carefully prepared and rote read speech, actually gives it a go from behind that lectern. He just keeps talking for another couple of minutes at least to avoid the embarrassment of being a shadow spokesman who cannot even get to his time. This is a person who has been highly critical of Howard government initiatives, like the Health Insurance Amendment (Extended Medicare Safety Net) Bill 2014, which actually gives us the finely balanced public and private health system that we enjoy today. To hear him quoting Private Healthcare Australia talking about projected losses from private health insurance belies the fact that tens of thousands of people downgraded their private health cover. Everyone in this room knows the extraordinary pain that privately insured Australians have been subject to as a result of Labor's nickel-and-diming of the private health system.

But today, we talk about the Extended Medicare Safety Net. This is one piece of elegant social policy, that takes on probably the most challenging part of health costs and health inflation, and yet hits up against those two barriers that we all learn about in economics 101—those are moral hazard and adverse selection. They are the two challenges for this policy. It is not easy. But, of course, it is easier if you are a Labor speaker. You can just gloss over everything. You can go on about how Liberals are bad for poor people and that kind of simple, visceral argument that most people have grown tired of.

In the main, Australians are hardworking, engaged people, caring about their health and education. They want a system that gives them choice. The Medicare safety net and the extended safety net do just that. It says to people that regardless of your background, whether you are a concession holder, a family tax benefit recipient or simply a general recipient, there is a threshold there for you after which 80 per cent of your out-of-hospital Medicare item related expenditures will be covered by the government. For Labor to slither in here and say to you 'Poor people did not benefit enough' belies the fact that 50 per cent of procedures—in some cases more—are done in the public hospital system where there is no out-of-pocket expense. It is for people who accrue an out-of-hospital expense on a Medicare related issue.

Medicare is used as a formula to fund a public hospital. By definition, you do not have an out-of-pocket expense when you go into a public hospital for admission. Therefore, it is not of any great concern to you. The extended safety net is there when you accrue general practice, pathology, radiology and out-of-hospital expenses in the private sector. By definition, if you are privately covered, you will accrue more of them. If you only visit a bulk-billing doctor and a public hospital, you will not accrue many out-of-pocket expenses. The average person will accrue around $50 a year. You do not even get to the safety net to begin this discussion about an Extended Medicare Safety Net. So please do not believe the rubbish that Labor peddles in here about rich people and poor people.

The reality is that we know about 11,000 Australians do hit that horror figure of $2,000 out-of-pocket health expenses. For all the elegance and the brilliance of the Australian health system, we still do have a significantly larger out-of-pocket issue than many European countries. That is made up for with a generous welfare system. We always have to be mindful of out-of-pocket expenses. So the Extended Medicare Safety Net of March 2004 was really born of the then health minister Tony Abbott, who found a solution to these periods in the life cycle where health expenses are out of control. They may include cancer, diabetes, assisted reproductive technologies and, of course, having a baby. So many people elect to have a baby in the private sector and find these enormous out-of-pocket expenses. For following years those simply did not occur. It is an excellent way of solving that very specific problem.

But what did we discover? The previous speaker did allude to this. We discovered something called provider leakage—that is, of all the money provided through the safety net system, how much ended up in whose pocket. In the game, we call that tax incidence. We realised that, for certain areas that consumed half of the safety net, about 78 per cent of it was going straight to doctors. This brings up the issue of moral hazard. This is that communication across the table that none of us is ever really present at, unless it involves our own health. This is where a doctor will say, 'This is going to be expensive, but there's a safety net there so I don't want you to worry. Once we go over this element, virtually all of it is paid for by someone else, your neighbour, the guy down the road or the government.' That is why the 80 per cent element was there: to try to retain some form of price signal for the patient. But, of course, what we found over time was that those initial estimates that it would remain at about $400 million over the forwards reached $400 million a year. It was just growing in a couple of those specific areas, as I mentioned, particularly obstetrics and ART. It is okay to do all the analysis about who was benefiting from the safety net, but I want to tell you something clearly. When you get out of bed you do not say to yourself, 'Not much on today. I wouldn't mind going down to the hospital to accrue some out of pocket.' That is not the way I would like to spend my day. People do not say, 'I would rather not watch the State of Origin. I would rather go down and see how much money I can rip out of the health system.' People in hospitals are there for a reason. They are there to give the best possible care this country can deliver.

So whenever we pause for a moment and look at our out of pockets, let's remember that this is not something we enjoy spending. It is not something that is put onto a credit card and you are told to go for your life. The issue here is the one that I have mentioned.

The second point is the adverse selection. This was the risk that in just a couple of areas we had a real hint that in particular postcodes, for instance, there was a ballooning of these expenses and there was very little means for the government to contain it. There are two solutions to that adverse selection dilemma. The first was Labor's approach, and the second is ours, with this legislation today. Labor's approach was simple. It talked about chopping off and putting hard limits right across sectors, regardless of the people involved and regardless of what was happening. This caused enormous pain for people who were going through IVF. None of us for a moment want to contemplate the notion that we would ever ration IVF for a needy couple. The reality is that we are virtually the only country that does not put severe age restrictions on IVF nor limit how many cycles people can attempt. Virtually every other country does this. So it is already a very generous system.

But the point is that if this is being consumed, if it is consuming a quarter of the extended Medicare safety net, then clearly it was just going straight out of the government's hands and straight into the pockets of providers. I appreciate that delivering health care is expensive, but that argument that there has to be some form of equality across the sectors was important.

I note that previous speaker very elegantly summarised the overview of the 2009 report. He virtually got it word for word. It sure helps when you are reading notes. But whether you have diabetes and accrue $369 of expenses on average or cancer at $1,000, the whole point of this system is that you need something way more nuanced. You need the ability to identify where you are getting provider leakage, and then to act. The bill simply says that a minister can keep a watching brief through the department on movements that are often quite fast within the provider community in health, and actually act with an instrument that is very similar to a disallowable instrument. Parliament has the opportunity to disallow. It sits over on the other side for the required number of days and gives everyone the chance to see whether or not they agree. That allows you to crack the walnut without a sledge hammer. Just pick up that one little area where there is concern, when we are overviewing through a professional services review how the money is spent, and get it fixed. It is a nuanced solution.

But let no-one on the other side of the chamber traduce the idea of a Medicare safety net, because that is one of the great reforms, after Michael Woolridge's 1990s private health insurance reforms, that have shaped the nation. It disappoints me somewhat that the Labor Party is always stating that they are the guardians of the health system, but when they are in power it is fascinating how little they can do with the health system, and how all the problems that were challenging us and just evolving in 2007, like the Medicare safety net blowouts, are still there for us to catch when we come back into power. So for all of the protestation about how much you love and care for the health system, this is a party that can nickel and dime private health insurers and make life tough for them, and go to eye surgeons and cut their rebate in half for no good reason whatsoever—only to have it backflipped again when Kevin Rudd, was it, was trying to survive as Prime Minister. He said 'Jettison the barnacles. Find me a solution to this one.' Lift the health minister out of the red zone because he is being beaten up by a tiny band of eye surgeons who are saying, 'For goodness sake, what are you doing to blindness when you halve a cataract rebate.' This was Labor's reform at its heart. Just halve a rebate. That seems like a quick way to save some money.

This is how you have a better working health system and you save the money at the same time. It is a system that allows people still to get access to health services but does not let individual sectors get away from us. There is a certain conflict for me, as a former specialist. But to be honest, we do not exist in a world where we set the price and everyone has to pay it. It is not that simple. In city areas where there is plenty of provision of services and there are plenty of specialists like me, of course they are looking over their shoulders seeing who is charging what. There are plenty of mechanisms and competitive tensions around price, even for a doctor.

The second point is that there is communication between doctors and patients and the receptionist at the front desk all the time about price. So don't for one minute believe the Labor rhetoric that this is just doctors charging whatever they want. Sure, there were areas where people knew that the Medicare safety net was going to cover 80 per cent of the expense, but this is the solution: an ability to individually isolate an item or a sector and address it. That is what will actually save us more money in the Medicare safety net, to make it more generous in the future.

Before I sit down it should be mentioned that we have reduced those thresholds for eligibility down to $600, $700 and $1,000 respectively. It is a small, but not insignificant, thing in the budget that has not received enough attention. That will make it even more certain that people who have these precipitous expenses can be looked after by the Medicare system.

We can bat backwards and forwards who is the best friend Medicare has ever had, but one thing is for sure: we have found that over the last six years there were a lot of abortive attempts at improving the health system which really led to nothing. In this bill—and I commend it strongly; I am delighted to see the other side supporting it—we have a common sense, targeted approach to a piece of legislation that has served this nation well. I hope the extended Medicare safety net will continue to help.

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