Bills Digest no. 159 2008–09
Health Insurance Amendment (Extended Medicare Safety
Net) Bill 2009
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date
introduced: 28 May
2009
House: House of Representatives
Portfolio: Health and Ageing
Commencement:
1 January
2010
Links: The relevant
links to the
Bill,
Explanatory Memorandum and
second reading speech can be accessed via BillsNet, which is at
http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The purpose of this Bill is to
amend the Health Insurance Act 1973 (HIA 1973) to allow
the Minster for Health and Ageing to make determinations, by
legislative instrument, that will specify the maximum benefit
payable under the Extended Medicare Safety Net (EMSN) for certain
items listed on the Medicare Benefits Schedule (MBS).
The Extended Medicare Safety Net (EMSN) is intended to protect
patients from high out-of-pocket medical costs for out-of-hospital
medical services, such as GP and specialist attendances. In 2008
expenditure on the EMSN was $414 million.[1]
The current safety net arrangements actually comprise two safety
nets. The original Medicare safety net was introduced at the same
time Medicare commenced in 1984. It covers the difference between
the Medicare benefit and the schedule fee for out-of-hospital
services once expenditure on gap expenses reach $383.90. After
qualifying for the safety net, the Medicare benefit increases to
100 per cent of the schedule fee, rather than the usual 85 per
cent.
The EMSN was introduced by the former Howard Government in 2004
as part of the Medicare Plus reforms, to tackle high out-of-pocket
costs for medical services.[2] The then Labor Opposition opposed its
introduction.[3]
Under the EMSN patients are reimbursed 80 per cent of their
out-of-pocket costs for all out-of-hospital Medicare services, once
annual personal expenditure on these reaches a certain threshold
(indexed annually). The expenditure thresholds are currently set
at: $555.70 for families in receipt of the Family Tax Benefit Part
A (FTB (A)) and concession card holders, and $1111.60 for all
others. The proposed measures contained in this Bill only affect
the EMSN and do not affect other arrangements such as those under
the original Medicare safety net (or benefits for dental items
provided to patients with chronic conditions that are also subject
to a cap ).
While EMSN payments have provided many with financial relief
from significant out-of-pocket medical costs, a recent review of
the EMSN, commissioned by the Government, cites evidence that those
in greatest financial need may be missing out on its benefits,
while some doctors have been charging excessive fees.[4] The review found that for
every EMSN benefit dollar that is paid to a patient, 78 cents went
towards meeting the doctors higher fees, rather than reducing
patients out-of-pocket costs. Further, those who have benefited
most from more affordable services, have tended to be wealthier as
they are in a better position to be able to access more expensive
specialist services in the first place.[5]
Concerns over the cost of the safety net and the charging of
excessive fees by some doctors have been raised previously.[6] In 2005, prompted by
concerns over the increasing cost of the EMSN the Howard government
raised the safety net expenditure thresholds so as to reduce the
numbers of people who would qualify for the EMSN and rein in
costs.[7]
The Bill proposes amendments that will allow the Minister to
specify through legislative instrument that certain Medicare items
have their EMSN benefit capped to a specified amount. The items to
be capped and the level of the EMSN benefit cap will be established
by legislative instrument, allowing it to be subject to
Parliamentary scrutiny. A draft Ministerial determination and
explanatory statement outlining details of the items the Government
proposes be capped was tabled by the Minister at the time the Bill
was introduced.[8]
According to this draft, items to be capped include: all obstetric
services (items 16400 16636) including a number of diagnostic
imaging (ultrasound) services, some Assisted Reproductive
Technology services (items 13200 13251), the item for cataract
surgery (items 42702), the item for hair transplantation (item
45560), an item for varicose vein surgery (item 32500) and the item
for the injection of a therapeutic substance into an eye (item
42740).
The Government argues the measures proposed in this Bill will
support the long term sustainability of the EMSN and create a
mechanism whereby expenditure on the EMSN can be managed
responsibly . Savings of more than $450 million over four years are
anticipated to be generated by the implementation of this measure.
[9]
The measures proposed in this Bill were announced in a media
release by the Minister for Health and Ageing, Nicola Roxon, as
part of the 2009 10 Budget.[10]
The Bill has not been referred to Committee.
There has been little commentary on the main thrust of this
Bill, which proposes to empower the Minister to cap benefits
through the mechanism of a legislative instrument. Most of the
commentary around this Bill has largely focused on the general
proposal to cap EMSN benefits, and the merits, or otherwise, of
capping specific Medicare items. There would, presumably, be
further scope to debate the merits of specific caps when, and if, a
motion to disallow a particular instrument is moved.
Some groups have reacted positively to the proposed changes to
the EMSN. The Australian Healthcare & Hospitals Association s
Prue Power welcomed the reform of the safety net because it will
target benefits more directly to those in need and reduce
manipulation of the safety net by private medical
providers.[11]
Robert Wells, an academic from the ANU argued the changes will
address some of the outrageous rorts under the current safety
net.[12]
Others are worried the measure will undermine the affordability
of certain services. Dr Andrew Pesce from the national body
representing obstetricians and gynaecologists (and President-elect
of the Australian Medical Association) has expressed concern that
capping the EMSN will significantly affect the affordability of
private obstetric services. If women can no longer afford private
obstetric care, he argues, they will be forced back into the public
hospital system, which is already overwhelmed and barely coping .
Dr Pesce has also criticised the review of the EMSN, upon which the
Government based many of its assumptions, as flawed.[13] The proposed changes
affecting assisted reproductive technology (ART) services prompted
AMA President, Dr Rosanna Capolingua, to express concern that
assisted reproductive services may become unaffordable, except for
the most well off .[14] One IVF practitioner estimates that out-of-pocket
expenses for an IVF cycle will rise from $1600 up to $3500 as a
consequence.[15]
Another specialist, varicose vein expert Professor Ken Myers has
expressed concern that the cap would add several hundred dollars to
the out-of- pocket cost for varicose vein treatment, making it less
affordable for pensioners.[16]
Some Opposition members have argued that the proposed capping of
safety net benefits amounts to a broken promise .[17] However, the Opposition has not
explicitly indicated that it will oppose this measure.[18]
No specific statements on this proposal from the Greens or the
Independent Senators have been identified.
Budget Paper no. 2 outlined the savings expected to be realised
from the introduction of this measure; details consistent with
these savings were also provided in the Explanatory
Memorandum.[19]
The Government is also proposing to increase the schedule fee
for 15 obstetric items from 1 January 2010, estimated to cost
$157.6 million over four years. Savings to be generated as a result
of the provisions proposed in this Bill are estimated to be $451.6
million over four years. Net savings of $193.7 million over four
years will be realised from the capping of the obstetric items, and
savings of $257.9 million are estimated from the capping of EMSN
benefits for the other Medicare items.
Item 1 proposes 2 new sections be inserted
after subsection 10ACA(7) of the HIA 1973, which deals with the
application of the safety net to families.
Proposed subsection
10ACA(7A) provides that for
Medicare items specified under proposed section
10B of the HIA 1973, the EMSN benefit should not
exceed the EMSN benefit cap. Proposed
subsection 10ACA(7B) outlines the method to be
used for determining which EMSN benefit cap will apply where two or
more pathology services are treated as if they were a single
service. This allows for a patient to receive the higher cap
benefit where 2 pathology services are treated as one service and
both services are capped at different amounts.
Item 2 proposes to insert 2 new sections after
section 10ADA(8) of the HIA 1973, which deals with the application
of the safety net to individuals. Proposed
subsections 10ADA (8A) and (8B)
will have the same effect as the proposed sections that apply to
families, as set out at item 1.
Item 3 proposes new section
10B be inserted after section 10A of the HIA 1973
and is essentially the central operative provision of the proposed
amendments. Proposed section 10B
will allow the Minister firstly, to determine by legislative
instrument what MBS items will have a cap benefit applied and
secondly, the amount of the cap benefit for each of the items. The
instrument will be a disallowable instrument and subject to
parliamentary scrutiny.[20]
Item 4 proposes that the proposed EMSN benefit
cap arrangements will only apply to services rendered after the
commencement of the Act, which is January 2010.
Concluding comments
The provisions proposed in this Bill will allow the Minister to
determine through ministerial instrument that certain Medicare
items can have their safety net benefits capped . A draft
determination indicates that obstetric and ART services, a
treatment for varicose veins, cataract surgery, hair
transplantation surgery and the injection of a therapeutic
substance into the eye will have their benefits capped.
The Government intends that the proposed changes will make the
safety net more sustainable into the future and result in some
significant savings. But others argue that the changes will result
in patients paying more for certain services. The extent to which
this occurs could be assessed by a regular review of the proposed
arrangements.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
2514.
Amanda Biggs
16 June 2009
Bills Digest Service
Parliamentary Library
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