Doorstop interview: Private health insurance

CATHERINE KING, SHADOW MINISTER FOR HEALTH AND MEDICARE: Thanks everybody for coming out this morning. Can I start by thanking Vermont Private Hospital, to Grant, to Leanne, to Julian and to Jim who've hosted us here at this terrific state of the art facility here in the south eastern suburbs of Melbourne.

 

Look, I am very excited to be here with Labor leader Bill Shorten announcing our plans to make private health insurance more affordable for ordinary Australians. We are making private health insurance more affordable for more Australians because frankly, the Turnbull Government has not done enough. What we've seen over the course of the last few years is private health insurance premiums going up by a thousand dollars under the Turnbull Government. We've seen people dropping their private health insurance, we've seen an increase in gap payments, and it is simply not sustainable. At the same time, we've seen private health insurance companies’ profits grow, $1.8 billion pre-tax last year alone, large capital reserves held by many of the private health insurers as well. The system is simply not sustainable.

 

Our plan makes private health insurance more affordable for 13 million Australians. It saves families $340 on average and it is important in making sure that we continue to have private health insurance as a product that is available for people. But of course that short term relief doesn't stop there. What we want to be able to do is make sure that there is a reform pathway which is why we've announced a Productivity Commission inquiry to look at serious reform of the private health insurance sector. We know there are substantial issues. We know for small, not for profit, neutral private health insurers, that they have a different market, and we want to make sure that they remain competitive and strong and able to grow in what is becoming an increasingly uncompetitive market, in a difficult area for many, many families. 
 
 So that is why only Labor has a plan to make private health insurance affordable, to put consumers back at the heart of private health insurance, instead of what the Turnbull Government has been doing, kowtowing basically, to the private health insurance industry and putting profits of private health before patients. And I might hand over to Bill.

BILL SHORTEN, LEADER OF THE OPPOSITION: Thanks Catherine. Hello everybody. Today Labor is announcing cost of living relief for 13 million Australians. I think Australians are fed up with the private health insurance giants pushing Government around and Australians paying the price. 
 
Since the Liberals were elected in 2013 families are paying on average $1000 extra in private health insurance premium increases. This is simply too much, too high. I mean, the private health insurance industry has been doing very well. They return profits, the big companies, return profits which are even higher than the big banks. At the same time Australian families are finding it harder than ever to make their budgets balance. 
 
So today I'm pleased to announce, that Labor if elected, will cap increases to private health insurance at two per cent for each of the first two years. That's a genuine measure to help cost of living pressures on Australian families. If you look at the last 10 years, private health insurance has gone up five and a half per cent a year. So what this means for Australian families, if Labor form the next government, is that they will be $340 better off. What we will also do at the same time, is conduct the first root and branch review of the private health insurance industry, and making sure that we've got the economics of it right. And we'll involve all the players, the doctors, the nurses, the practitioners, the consumers, the hospitals and of course the insurers. 
 
Catherine made a very good point that you know, the mutuals and some of the smaller players, we get that they're doing different things, but the idea that taxpayers pay $6 billion a year to the big insurers, the idea that these insurers are making record profits and yet the premiums keep going up and up and up, that can't be sustainable, business as usual won't cut it any longer for private health insurance. 

 

So today Labor is announcing cost of living relief, putting downward pressure on the price of increases of private health insurance. We want a strong private health insurance industry, but what we won't do is write a blank cheque. At the end of the day, someone's got to speak up for families in this country, help them meet their cost of living pressures and that's what Labor is doing. 

 

Happy to take any questions people might have. 

 

JOURNALIST: So while the large profit-making health insurers might be able to cop a two per cent cap over two years, but what about those smaller not for profit insurers, does Labor accept that there will be more of an impact on them?

 

SHORTEN: Well what we're prepared to do is work with APRA, if we're elected, to make sure that the burden doesn't unduly fall on the small ones. We do clearly distinguish between the mutuals and some of the smaller ones, who we think they're offering good value so we'd work through with APRA to make sure there are no unintended consequences.

 

But let's be upfront here, we're seeing the big private health insurers making record profits. They operate in a highly regulated market. I noticed that Mr Turnbull and others have immediately attacked Labor for wanting to do something to put downward pressure on cost of living prices, what's his choice? He seems to think it's a triumph if the private health insurers only increase their fees by four per cent. He seems to think that that's quite reasonable. He's so out of touch that he doesn't understand that families have to find that extra four percent in increased premium. I mean, it's not as if wages are going up by four per cent in Australia. He says that somehow this is a bad move against the private health insurers.

 

You know, the choice is going to be clear at the next election. Under Labor private health insurance premiums will only go up two per cent each year. Under the Liberals it'll be open slather, and for good measure Mr Turnbull will give all the big private health insurers a company tax cut. 

 

JOURNALIST: Why did Labor settle on two per cent over two years, why not a total freeze?

 

SHORTEN: Well we saw what Mr Howard did with the freeze in 2000, and if you just do a 12 month freeze then there was just pent-up demand and there was no reform behind it. This is not just about capping private health insurance premium rises, it's about reform. I might get Catherine to talk a bit further about that.

 

KING: Thank you. Well that's exactly right, and it was exactly right that there was no reform narrative after the Howard Government capped or froze private health insurance premiums, they basically just left it there, had it low for a year and then there was no reform narrative. 

 

What we're actually wanting to do is work very, very closely with the entirety of the sector to actually try and drive significant reform. This is simply not sustainable. If we keep going the way that we are, this product, this private health insurance product that is needed by many Australians, will become unaffordable for many, and we're already starting to see that. We're going to see demand drop in private hospitals so that sustainability of private hospitals also goes down. We also see private health insurers are also starting to say that their costs are not sustainable.

 

So something's got to give somewhere, and unfortunately under Malcolm Turnbull, the thing that's been giving is the pockets of ordinary Australians. So we want to make sure that there is a cap in place for the period of the Productivity Commission review, that two years while we undertake that review, and then work with the sector overall to get better reform and better outcomes for patients.
 
 SHORTEN: Other questions?

 

JOURNALIST: Just regarding the leak, the cabinet files. The Prime Minister has called the breach 'disgraceful and negligent'. Can you certain that it didn't occur under the Gillard or Rudd Governments and if it did should either of them bear that responsibility? 

 

SHORTEN: The Liberals have been in for five years, are they saying that this cabinet sat in a Canberra second-hand furniture warehouse for five years? No, I think Mr Turnbull needs to put his hand up here. It is a remarkable breach. I think a lot of Australians are going, what on earth is going on when our secrets are put in a locked cabinet and taken out the back and trolleyed out to a second-hand furniture store? Well that's not security, that's just a joke.

JOURNALIST: Just today the State Government in Victoria are gauging interest over whether ANZAC Day and Remembrance Day could be expanded to allow the recognition of Indigenous Australians that were killed when the first white settlers came over. What do you think about that?

 

SHORTEN: I'm not aware of any plans to change ANZAC Day. ANZAC Day is about commemorating the fallen in the wars that Australia has participated in.

 

JOURNALIST: So is that something that has ever been considered at a federal level?

 

SHORTEN: Oh it's not even on my radar. 

 

So just in finishing, I just want to make this point very clear. I notice that Mr Turnbull has sneered at our proposals to cap private health insurance at two per cent for two years. These are the facts, and I'd ask Mr Turnbull in 2018 to perhaps reconsider his first knee jerk reaction to back the big end of town. 

 One, this sector, the big health insurers are making profits of 25 per cent. Two, this sector receives billions and billions of dollars of taxpayer money already, so this is a – at the top end it's a rich sector who are receiving a lot of government support, and what they're doing is they keep increasing the premiums you know, year after year, and this Government seems to think, Mr Turnbull seems to think that a four per cent increase is quite reasonable. He seems to think it is a triumph. 
 
 Well, there is a very clear choice at the next election. You can vote Labor and under Labor private health insurance will go up for two per cent, at most, for each of the next two years. And under the Liberals, it will be the private health insurance companies, business as usual, prices going up and up and up, and Mr Turnbull will give them a tax cut. Only Labor has got a fair dinkum plan to deal with cost of living changes at the next election. 

 

I also just want to make this very brief remark as we approach Parliament tomorrow. I'd just say to the Government that the citizenship saga of last year really annoyed a lot of people, not just about Labor and Liberal or Mr Turnbull or myself. It casts the whole of the Parliament into not the best light at all. So this year we've got to stop the nonsense. So again I'd just say to the Government, you've got question marks you say exist over some of our MPs – we don't accept that that argument's right but we're prepared to compromise. There are clearly question marks over some Government MPs, I think the people of Australia would be very unimpressed if we just continued to deal with in a partisan basis this citizenship matter. And I think to make sure that 2018 is a better year for Australian politics than 2017, I think both sides of politics - all sides need to reach a sensible compromise.

 Thanks everybody, have a lovely day.