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Private Health Insurance Amendment (Lifetime Health Cover Loading and Other Measures) Bill 2012

Introduced into the House of Representatives on 28 November 2012
Portfolio: Health and Ageing

1.1        This bill amends the Private Health Insurance Act 2007 to remove the private health insurance rebate on premiums that have increased because of changes to the Lifetime Health Care Loading. The loading is an additional amount charged to persons who have not taken out continuous private hospital cover by the age of 31 or within a certain period after coming to Australia.

1.2        The bill also removes an option for a person to claim their rebate as a direct payment from a Department of Human Services Service Centre (as this is seldom used).

Compatibility with human rights

1.3        The bill is accompanied by a self-contained statement of compatibility which identifies that the bill engages the right to health. 

1.4        As noted below, the bill does not appear to give rise to issues of incompatibility with the right to health.

1.5        The effect of the bill is to decrease government support by way of a mean-tested rebate on private insurance premiums by removing from the amount on which the rebate is calculated an amount reflecting the Lifetime Health Care Loading. The imposition of the Loading is intended to encourage people to take out private hospital cover earlier in life and to maintain their cover. The effect of the bill is that the full amount of a Lifetime Health Cover Loading will be paid by the policy holder. Therefore, the amount that some persons pay for health insurance will in effect be increased because there will be no rebate in respect of the Loading element of their health insurance premium.  

1.6        The statement of compatibility justifies the measures in these terms:

The Bill will ensure that recipients of the Government’s private health insurance rebate are treated consistently, regardless of whether they have a LHC loading or not. This measure will ensure the sustainability of the rebate. The Bill will also improve the effectiveness of the LHC loading as an incentive for a person to take out private health insurance early in their life and maintain it, providing greater support to the principle of community rating.[1]

1.7        The amendment will increase the cost of health insurance for people with a Loading, and to that extent it might be viewed as having an adverse impact on persons who are consequently not able to afford the same level of health insurance. The statement of compatibility justifies the measure on a number of bases: ensuring the equal treatment of all, as a measure to ensure sustainability (possibly a reference to the concept of progressive realisation), or as a permissible limitation on an individual’s right. It also makes the point that there is in any event a sufficient level of enjoyment of the right to health guaranteed under the public health system and other arrangements:

This Bill may increase the cost of obtaining private health insurance for people who have a LHC loading. However, it ensures that all rebate recipients are treated consistently, subject to age and income. It also ensures that the principle of community rating in private health insurance for all Australians despite their age, race, gender and health status remains embedded as part of the Australian health system. All Australians will remain eligible for public health insurance through Medicare, the Pharmaceutical Benefits Scheme and the public hospital system. It is for these reasons that there is no incompatibility with the right to health because the legislation is for a legitimate objective and reasonable, necessary and proportionate in the circumstances.

1.8                 The committee considers that, although the exact basis on which the measure has been analysed in human rights terms is not clear from the explanatory memorandum and statement of compatibility, the bill does not appear to give rise to issues of incompatibility with the right to health.

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