House of Representatives

Second Reading Speech

Mr Abbott (Warringah - Minister for Health and Ageing)

I move:

That this bill be now read a second time.

This bill amends the Private Health Insurance Incentives Act 1998 and the Income Tax Assessment Act 1997 to increase the private health insurance rebate from 30 per cent to 35 per cent for people aged 65 to 69 years and to 40 per cent for people aged 70 years and over.

Australia enjoys one of the best systems of health and hospital care in the world. The public and private sectors co-exist and complement each other, with the private hospital sector providing about half of all acute hospital procedures.

Over the last decade, the government has initiated a number of reforms to introduce greater balance between the private and public health sectors. For example, the government introduced the Medicare levy surcharge, private health insurance rebate and Lifetime Health Cover.

Older Australians have the greatest need to ensure their access to health care. The reality of ageing is that we are more likely to see the inside of a hospital in our older years than our younger ones.

This is why so many older Australians choose to have private health insurance.

This is a generation whose byword is self-reliance and whose commitment to private health insurance cover has helped to keep the whole system going.

The government believes self-reliance should be rewarded and that private health insurance should be even more accessible and affordable for older Australians. This is even more important for a generation of whom so many are pensioners or self-funded retirees on low to moderate incomes.

From 1 April 2005, for a typical couple or family policy, the higher rebates will reduce premiums for eligible policies by about $100 to $200 a year over and above the existing 30 per cent rebate.

Like the existing 30 per cent rebate, the higher rebates will be able to be claimed as premium reductions through private health insurance funds, as a direct payment from Medicare offices or as a tax offset in annual income tax returns. The premium discount option is already taken by 95 per cent of premium payers, and it and the cash payment option are, of course, available for retirees who no longer have to pay income tax.

Again, as for the existing rebate, the higher rebates will be available for hospital cover, ancillary cover and combined cover.

The higher rebates will apply to individuals who meet the age thresholds and to couples and families where one or more of the persons meets these age thresholds.

The estimated cost of the higher rebates will be $445.5 million over four years.

The bill will also amend the definition of a veterans gold card for the purpose of Lifetime Health Cover. The amendment will ensure that Australians with a veterans gold card issued either under the Veterans' Entitlements Act 1986 or the Military Rehabilitation and Compensation Act 2004 are not affected by the application of Lifetime Health Cover.

Mr Speaker, this bill implements a major coalition election commitment. It will help to ensure the continued strength of Australia's public and private health systems.

I commend the bill to the House and present the explanatory memorandum.