MEDICARE LEVY

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (15:39): My question is to the Minister for Health. How will our hospitals cope with the increased burden on the public health system as a result of the federal Labor government's decision to increase the Medicare levy threshold? An Access Economics report prepared by the Australian Medical Association states that the Medicare levy threshold is estimated to create a net saving of $299 million over four years. This means that some 285,000 people will need to drop their private health cover by 1 July 2008 to achieve the savings measures. The minister is aware that that means they will be relying on public health services.

Mr Venning interjecting:

The DEPUTY SPEAKER: Order, the member for Schubert!

The Hon. J.D. HILL (Kaurna—Minister for Health, Minister for the Southern Suburbs, Minister Assisting the Premier in the Arts) (15:40): I thank the Deputy Leader of the Opposition for her question. The question asks me really to comment on a commonwealth government decision in relation to a tax cut to a substantial number of South Australians, and I am sure all those South Australians who are beneficiaries of that tax cut are grateful, and no doubt they will be interested to know that the opposition is opposed to them getting that tax cut. I guess from time to time they will be reminded of that at appropriate times, and will no doubt be written to.

What will the impact of that tax cut be on the behaviour of those people and their actions in relation to private health insurance? I do not think we know at this stage, but we can make some guesses. My guess would be that the majority of those people in the short term probably will not make too many decisions at all. Over time, there would be, I believe, an expectation that a percentage of the people who are potential beneficiaries of the tax cuts will stop taking out private health insurance.

The advice I have is that the overwhelming majority of the people in this category are likely to be young, relatively healthy persons, and they are also likely to be ones who have taken out the minimum level of private insurance. So, in fact, the majority of those persons who will be the beneficiaries of the tax cut, if they do drop their private insurance, are unlikely to put much burden on the public health system at all, for two reasons. First, they are people who are unlikely to have chronic diseases or need of the hospital system for elective surgery. Secondly, those who are likely to have babies or are thinking about having babies will probably hold on to their insurance if they want to use the private health system for that purpose, but the majority of those people are unlikely to have any elective surgical procedures planned, so they will not be a burden on our system. The most likely burden will be if they need emergency work. Of course, most people, regardless of whether or not they have private insurance, go to emergency hospitals. So, the consequences of this I think are likely to be very slight.

There is a greater potential consequence down the track because, if the pool of insurance funds is diminished and the high end users stay within the funds, the consequence of that will be upward pressure on the price of insurance. That, to me, is more likely to cause a significant impact on the public health system. When that will occur, of course, we cannot tell. That might be two or three years down the track. That relationship between the cost of private insurance and the number of people in the fund is something I guess the commonwealth government will have to address. But, in any event, we are now going through negotiations with the commonwealth over the Australian Health Care Agreement, and what we are looking for is an agreement which is based on a fair arrangement between the states. So, if we in fact do get more patients going through our public hospital system, we would expect the commonwealth to provide complementary suitable funding for it.

I am optimistic that these consequences will be minor in the short term and will feed into the Australian Health Care Agreement, and the commonwealth government will have to pick up the funding if there are any longer term consequences.