Private Health Insurance
(Reinsurance Trust Fund Levy) Amendment Bill
Date introduced: 7 December 2006
House: House of Representatives
Portfolio: Health and Ageing
Commencement: Sections 1 to 3 on Royal Assent.
Schedule 1 commences on 1 April 2007.
The purpose of
this legislation is to amend the Private Health Insurance
(Reinsurance Trust Fund Levy) Act 2003 to update definitions
resulting from the replacement of the National Health Act
1953 by the proposed Private Health Insurance
This is one of four Bills reimposing existing
levies on private health insurers. This Bill was introduced as part
of a suite of legislation to reflect the new regulatory regime
detailed in the accompanying Private Health Insurance Bill 2006
(PHIB 2006). On 7 December 2006 the Senate referred the suite of
Bills to the Community Affairs Committee, for inquiry and report by
26 February 2007.
Separate Bills are required for each levy
because they could be construed as imposing a tax and section 55 of
the Constitution requires that such Bills deal with one subject of
taxation only .
The reinsurance levy is currently authorised
under the National Health Act 1953 and is a levy on all
registered health benefits organisations (renamed private health
insurers under the proposed Act). The levy transfers and shares
risks across all the health funds, so that those funds with an
older and less healthy demographic membership are not disadvantaged
.(2) The levy enables funds to charge the same premiums
to everyone regardless of risk and is integral to the principle of
community rating .(3) In 2005-06 $182 million was
transferred amongst funds under the reinsurance
For a detailed discussion of the proposed
changes to the current reinsurance arrangements under the PHIB
2006, see the Bills Digest.(5)
The Schedule replaces a number of definitions
to reflect the replacement of the National Health Act 1953
with the proposed Private Health Insurance Act 2006; these
new definitions are described in the Explanatory
Memorandum. Broadly, the changes to definitions reflect the
new terminology under the proposed Act.
Items 8, 9, 10 and 11 repeal
and replace the definitions of the reinsurance trust fund
levy and levy day, with risk equalisation
levy and risk equalisation levy day.
Items 13 and 14 repeal and
replace the definition of supplementary reinsurance trust fund
levy day with supplementary risk equalisation levy
Item 15 sets out that the
risk equalisation levy be imposed on levy days as specified in the
Rules but no more than 4 per financial year, and that supplementary
levy days will be determined by the Minister by legislative
instrument, but these must not be more than 2 per financial
Item 17 sets out the table
explaining the process by which the rate of risk equalisation levy
is applied on a levy day or a supplementary levy day.
Item 20 allows for the
Minister (by legislative instrument) and the Governor General to
make rules and regulation for the purposes of the proposed Act.
Item 21 is a transitional
provision setting out that the total number of levy days in the
current financial year must not exceed six.
- Hon. Tony Abbott Private Health Insurance
(Reinsurance Trust Fund Levy) Amendment Bill 2006 Second Reading,
Hansard, House of Representatives, 7 December 2006, p.
- Private Health Insurance Administration
Council Operations of the Registered Health Benefits
Organisations Annual Report 2005-06, PHIAC, Canberra, 2006, p.
- Community rating is the principle that
persons cannot be discriminated against in obtaining or retaining
health insurance on the basis of health status, age (other than age
at entry allowed for under Lifetime Health Cover), race, sex,
sexuality, use of health services or claiming history.
- PHIAC, op cit, p. 12.
- Amanda Biggs and Luke Buckmaster Private
Health Insurance Bill 2006 Bills
Digest no. 81, 2006-07, Parliamentary Library,
This paper has been prepared to support the work of the
Australian Parliament using information available at the time of
production. The views expressed do not reflect an official position
of the Parliamentary Library, nor do they constitute professional
Published by the Parliamentary Library, 2007.