EXPLANATORY STATEMENT
Issued by the authority of the Minister for Human Services
Medicare Australia Act 1973
Medicare Australia (Function of Chief Executive Officer—Lifetime Health Cover) Direction 2007
Background
The Government introduced lifetime health cover on 1 July 2000, through legislative amendments. It provides for health funds to charge different premiums based on the age of members when they first take out hospital cover with a registered health benefits organisation.
Under lifetime health cover, people who take out hospital cover early in life are charged lower premiums throughout their life, relative to people who take out cover later. In particular, people who delay taking out hospital cover are charged a 2 per cent loading on top of their premium for every year they are aged over 30 when they first take out such cover.
In 2006, provision was made in the budget for mail-outs by the Department of Health and Ageing to those persons approaching lifetime health cover age and to other persons who have become subject to lifetime health cover. The Department of Health and Ageing has sought the assistance of the CEO of Medicare Australia.
Section 4 of the Medicare Australia Act 1973 (the Act) establishes Medicare Australia.
Sections 5 and 8AG of the Act create the office of Chief Executive Officer of Medicare Australia (CEO), with statutory functions. The CEO is, under the Minister and through the Secretary to the Department of Human Services, responsible for managing Medicare Australia.
Section 5 of the Act sets out a number of mechanisms for conferral of functions on the CEO. Paragraph 5(1)(d) of the Act provides that the CEO has any functions the Minister, by writing, directs the CEO to perform.
Purpose of the Direction
The purpose of the Medicare Australia (Function of Chief Executive Officer—Lifetime Health Cover) Direction 2007 (the Direction) is for the Minister for Human Services to confer a function on the Chief Executive Officer of Medicare Australia (CEO of Medicare Australia) to assist the Department of Health and Ageing in communications to members of the public about lifetime health cover as now established under Part 2-3 of the Private Health Insurance Act 2007 and allow the CEO of Medicare Australia to exercise powers in relation to that function.
Details of Direction
The Direction commences on the day after it is registered.
Function in relation to Lifetime Health Cover
This section, at subsection 4(1), confers on the CEO a function to assist the Department of Health and Ageing with communications to members of the public about lifetime health cover.
Sub-section 4(2) sets out what the function includes and provides sub-functions, including to identify persons approaching lifetime health cover age and other persons who have become subject to lifetime health cover (for example, migrants). Sub-section 4(2) also includes the sub-function to provide, by mail-out or other means, the information provided to the CEO of Medicare Australia by the Department of Health and Ageing about lifetime health cover to those persons.
The function conferred also includes the provision of information and reports to the Department of Health and Ageing in relation to the mail-outs and other means of providing information on lifetime health cover.
Sub-section 4(3) provides that for the function conferred on the CEO of Medicare Australia under this section, the CEO of Medicare Australia may use medicare information to identify persons approaching lifetime health cover age and those other persons who have become subject to the operation of lifetime health cover, to contact those persons by mail-outs or other means and for reporting to the Department of Health and Ageing.
Consultation
The Direction was settled after consultation with the Department of Health and Ageing.
The Direction is a legislative instrument for the purposes of the Legislative Instruments Act 2003.