House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Health, the Honourable Greg Hunt MP)

Statement of Compatibility with Human Rights - Private Health Insurance Legislation Amendment Bill 2018

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Private Health Insurance Legislation Amendment Bill 2018

The Private Health Insurance Legislation Amendment Bill 2018 (the Bill) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

This Bill amends the Private Insurance Act 2007 (the Act), the Ombudsman Act 1976 and the Age Discrimination Act 2004 in relation to a range of matters, including in supporting the implementation of reforms designed to improve the value of private health insurance, strengthening the powers of the Private Health Insurance Ombudsman and making policy information easier to understand.

In October 2017 the Government announced a number of reforms to private health insurance. This legislation supports the following reforms:

Improving the value of private health insurance

The Bill contains three measures designed to improve the value of private health insurance either in the form of lower premiums and/or improved cover for certain benefits.

1. Increased to maximum excess levels

The amendments in Schedule 1 will allow consumers to purchase products with increased maximum voluntary excess levels which are eligible for the Medicare levy surcharge exemption. Additional related changes will be applied in separate Bills containing amendments to A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 and the Medicare Levy Act 1986.

2. Age-based discounting for hospital cover products

The amendments in Schedule 2 will enable insurers to voluntarily offer products that provide additional premium discounts under a new age-based discount framework. It is intended that, in line with the announced policy, the Private Health Insurance (Complying Products) Rules will be amended to permit insurers to offer discounts to persons aged 18 to 29 years when they become insured under a policy that offers aged-based discounts. An amendment to the Age Discrimination Act 2004 has also been included to allow for these discounts to be made available to younger people.

3. Improved cover for travel/accommodation for hospital treatment

The amendments in Schedule 5, Part 1, enable insurers to provide benefits for travel and/or accommodation under hospital treatment. People living in regional and remote Australia who need to travel to access treatment that is not available in their local region will benefit most from this measure.

Making private health insurance easier to understand

The amendments in Schedule 5, Part 2 support the introduction of the private health information statement which will replace the standard information statement. Consumers will be involved in developing the format of the private health information statement to ensure that the policy details provided in the statement are more meaningful and simpler to understand.

Strengthening the powers of the Private Health Insurance Ombudsman

Under amendments the Ombudsman Act 1976 contained in Schedule 3 the complaint handling and investigative functions of the Private Health Ombudsman (PHIO) will be augmented by formal powers to conduct inspections and audits at the premises of a private health insurer or private health insurance broker. Offence provisions have been established to support the use of these powers.

Second Tier administrative reforms

The Bill also includes amendments in Schedule 5, Part 3 establishing a legislative framework for the Minister to assess and determine whether or not to include a private hospital in a class of hospitals eligible for second-tier default benefits.

Under the new arrangements, a hospital can apply to the Minister to be included in a defined class. If a hospital satisfies the assessment criteria, it is included in a class for the period determined by the Minister. If the Minister considers that the hospital has ceased to meet the assessment criteria, she or he may revoke its inclusion in the class. This decision may be reviewed by the Administrative Appeals Tribunal (AAT). A decision not to include a hospital in a class may also be reviewed by the AAT.

Closed and terminated products

The amendments in Schedule 5, part 4 allow insurers to terminate products as well as close them to new policy-holders. While this may limit choice in access to health services for people who hold a terminating product and do not wish to transfer to a new product, these people will still be eligible to receive the benefits of universal health care under the Australian public health system and may continue to access the private health system as privately self-funded patients.

Addressing benefit limitation period inclusive policies

The amendments in Schedule 4 improve consumer transparency by removing the use of benefit limitation periods in private health insurance policies. They effectively deem benefit limitation period inclusive policies to be compliant for the period from 1 April 2007 until 30 June 2018 for the purposes of the Act and all Commonwealth primary or subordinate legislation (other than some specified enforcement provisions). It also waives any associated debts or repayments to the Commonwealth owed by insurers or policy-holders.

The amendments validate benefit limitation inclusive policies covering psychiatric treatment until 31 March 2018 is in line with the Government's commitment to provide better access to psychiatric treatment under private health insurance from 1 April 2018.

Human rights implications

The Bill engages, or has the potential to engage, the following human rights:

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Right to health - Article 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR);

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Right to privacy and reputation - Article 7 of the International Covenant on Civil and Political Rights (ICCPR);

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Right to a fair trial/fair hearing - Article 14 of the ICCPR; and

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Right to the presumption of innocence - Article 14 (2) of the ICCPR.

The right to health

The right to health - the right to the enjoyment of the highest attainable standard of physical and mental health is contained in article 12(1) of the International Covenant on Economic, Social and Cultural Rights to which Australia is a signatory. Article 12(2)(d) provides for " steps to be taken by the States Parties to the present Covenant to achieve the full realization of this right shall include those necessary for...the creation of conditions which would assure to all medical service and medical attention in the event of sickness."

Schedules 1 and 2 provides various mechanisms designed to improve private health insurance participation rates, these include increased maximum voluntary excess levels (schedule 1) and age-based discounting (schedule 2). These measures are intended to increase the uptake of private health insurance. Although older or less healthy people may now be at a relative disadvantage in terms of paying higher premiums for the same product, it is also recognised that viability and sustainability of the private health insurance system relies on a broad membership base.

Schedule 5, part 1 allows private health insurers to offer travel and accommodation benefits under hospital treatment cover, is intended to benefit persons in rural and regional Australia to assist them in accessing hospital treatments that are not available locally.

In summary, the amendments in this Bill do not derogate a person's right to health and to the extent that they improve the uptake of private health insurance (Schedules 1, 2 and 4) they are intended to promote access to health services.

Right to not be subjected to arbitrary or unlawful interference with privacy

These rights are contained in article 17 of the International Covenant on Civil and Political Rights (ICCPR) to which Australia is a signatory. This article prohibits the unlawful or arbitrary interference with a person's privacy.

This Bill engages the right to privacy, the items in Schedule 3 amends the Ombudsman Act 1976 (the Act) by inserting a new division 3A in Part IID of the Act. The division contains provisions to allow the Private Health Insurance Ombudsman (the PHIO) to enter the premises of a private health insurer or private health insurance broker and conduct inspections and audits or investigations.

These powers relate to premises which may be considered to form part of a person's workplace or home (to the extent that it constitutes a premises in which the work of a private health insurer or broker is carried out) within the scope of Article 17. The exercise of the inspection and audit powers is constrained to cases where entry to premises is pursuant to a PHIO complaint or investigation.

An authorised PHIO officer cannot enter premises unless their identity card is shown to the occupier of the premises prior to entry (section 20ZHA). This provides for the transparent utilisation of the PHIO's inspection powers and mitigates arbitrariness and risk of abuse.

In respect of the power to inspect documents of a private health insurer or private health insurance broker, the PHIO is bound to observe the requirements of the Privacy Act 1988. The Ombudsman's Privacy Policy covers in detail its personal information handling practices and provides further transparency of Ombudsman operations. The Policy gives effect to the Australian Privacy Principles contained in the Privacy Act 1988. In summary, the provisions of the Bill are neither arbitrary nor unlawful where they engage the right to privacy.

Fair trial and fair hearing rights

Fair trial and fair hearing rights are contained in article 14 of ICCPR. This article provides a guarantee of respect for the principle of 'equality of arms', which requires that all parties to a proceeding must have a reasonable opportunity of presenting their case under conditions that do not disadvantage them against other parties to the proceedings. Those charged with a criminal offence have the rights set out in Article 14(2) to (7), including the presumption of innocence and the guarantees set out in Article 14(2).

Schedule 3 amends the Ombudsman Act 1976 by inserting a new division 3A in Part IID of the Act. The division creates a two fault-based offences (subsection 20ZHB(1) applies in the context of inspections and audits; and 20ZHB(2) applies in the context of investigation commenced under section 20TA)) for an occupier or person in charge of such premises to fail to provide reasonable facilities and assistance.

In summary, a person who is the subject of an offence to which subsection 20ZHB(1) or 20 ZHB(2) applies, has a right to a fair hearing before a competent, independent and impartial court, this position is therefore compatible with the right to a fair hearing under Article 14(1) of the ICCPR.

Right to the presumption of innocence - Article 14(2)

Article 14(2) of the ICCPR provides that everyone charged with a criminal offence shall have the right to be presumed innocent until proven guilty according to law. The right to presumption of innocence is also a fundamental common law principle.

When 'strict liability' applies to an offence, the prosecution is only required to prove the physical elements of an offence, not the fault elements, beyond reasonable doubt in order for the defendant to be found guilty. The defence of honest and reasonable mistake of fact is available to the defendant (see section 9.2 of the Criminal Code).

Strict liability is used in circumstances where there is public interest in ensuring that statutory schemes are observed and it can reasonably be expected that the person was aware of their duties and obligations. Strict liability offences can be considered a limitation of the presumption of innocence because the defendant can be found guilty without the prosecution being required to prove fault.

Strict liability offences will not necessarily be inconsistent with the presumption of innocence provided that removal of the presumption of innocence pursues a legitimate objective and is reasonable, necessary and proportionate to achieving that objective. Whether a strict liability provision impermissibly limits the right to the presumption of innocence will depend on the circumstances of the case and the particular justification for an offence being a strict liability offence.

Schedule 3 amends the Ombudsman Act 1976, and includes the creation of a strict liability offence (subsection 20ZIA(4)). Persons who are former staff members or other people engaged by the Private Health Insurance Ombudsman and have been delegated with inspection powers are required to return their identity cards within 14 day of ceasing employment with the PHIO.

This strict liability offence provision has been created to reflect the strong public interest in maintaining public confidence in the PHIO. It serves the purpose of mitigating a risk of former PHIO officials falsely impersonating public officials or misusing public power, and they are reasonable and proportionate in achieving that outcome.

In the main, the offence provision applies to former PHIO officials, who can reasonably be expected to understand the conditions of their employment including the return of public property upon cessation of employment. The strict liability offence is not punishable by imprisonment. It is punishable by a fine of up to 1 penalty units. It is a defence if the defendant can prove the identity card was lost or stolen.

The strict liability offence in the Bill acts as a deterrent to behaviour that would compromise the integrity of the functions of the PHIO's office. They are compatible with Article 14(2) of the ICCPR, as they pursue a legitimate objective.

Conclusion

The Bill is compatible with human rights because it promotes the right to health, and to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.