National Health Regulations (Amendment) 1997 No. 133
EXPLANATORY STATEMENT
STATUTORY RULES 1997 No. 133
Issued by the authority of the Minister for Health and Family Services
National Health Act 1953
National Health Regulations (Amendment)
Subsection 140 (1) of the National Health Act 1953 ('the Act') provides that the Governor-General may make regulations, prescribing all matters which by the Act are required or permitted to be prescribed.
The purpose of the Regulations is to clarify the distinction between accident and sickness insurance business and health insurance business. The distinction is of importance because only health insurance business is subject to the provisions of the Act.
The effect of the amendments is to exclude legitimate accident and sickness or trauma insurance products from health insurance business, while still preventing other products clearly designed to avoid the regulatory framework of private health insurance from undermining the principle of community rating.
Subsection 67(4) of the Act defines both "health insurance business" and "accident and sickness insurance business". Products that meet the definition of accident and sickness insurance business are not considered to be health insurance. This subsection also provides that business of a kind which is not to be included in the definitions of "accident and sickness insurance business" and "health insurance business" may be prescribed.
The Regulations amend Regulations 47 and 48 of the National Health Regulations and together define the boundaries between accident and sickness insurance and health insurance. Regulation 47 of the National Health Regulations prescribes the kinds of business which are excluded from the definition of "accident and sickness insurance business". Regulation 2 amends subparagraph 47(1) (b) (ii) to remove the word "ordinarily". The inclusion of "ordinarily" was an oversight in a previous amendment and overly widened the categories of prescribed business such that they applied to too wide a range of products.
Regulation 48 of the National Health Regulations prescribes the kinds of business which are excluded from the definition of "health insurance business". Regulation 3 inserts subregulation 48(2A) to exclude the business of undertaking liability for certain types of payments, including the provision of death benefits, terminal illness benefits and benefits payable as a result of a permanent disability, This clarifies that these benefits are not considered to be health insurance and were never intended to be covered by the Act.
BACKGROUND
The previous amendment to Regulation 47 arose from the emergence of proposed products clearly designed to avoid the regulatory framework of private health insurance. The products intended to be caught by the amendment were those purporting to be accident and sickness insurance, but which are, effectively, a form of health insurance with risk rated premiums.
Failure to prevent such products from being offered will lead to insurance policies that undermine the principle of community rating where all members of an insurance table must be charged the same premium regardless of personal characteristics such as age, sex or health status. These proposed products would operate outside the regulatory requirements and would therefore be able to offer lower premiums to the younger and healthier members of the community thus leaving registered health benefits organisations with the sick and the elderly. With the removal of the lower risk members health insurance funds would have to increase premiums thus making insurance too expensive for many of those who require it the most. Risk rated forms of insurance would either be unavailable or prohibitively expensive to those over 65.
The Regulations commenced on Gazettal.
Overview
The National Health Regulations (Amendment) 1997 No. 133, issued under the authority of the Minister for Health and Family Services, amends the National Health Regulations to address the problem of products designed to avoid the regulatory framework of private health insurance. The policy objective is to clarify the distinction between accident and sickness insurance business and health insurance business, ensuring that only health insurance business is subject to the provisions of the National Health Act 1953. This amendment specifically excludes legitimate accident and sickness insurance products from being considered health insurance while preventing products that seek to undermine the principle of community rating, where all members of an insurance table must be charged the same premium regardless of personal characteristics. The Regulations amend Regulations 47 and 48 to define the boundaries between accident and sickness insurance and health insurance, ensuring that products such as death benefits, terminal illness benefits, and benefits payable as a result of permanent disability are not considered to be health insurance.
Scope and Application
The National Health Regulations (Amendment) 1997 No. 133 pertains to the National Health Act 1953 and seeks to delineate the boundaries between accident and sickness insurance and health insurance. The amendments are aimed at ensuring that only health insurance business is subject to the provisions of the Act, thereby preventing products designed to evade the regulatory framework of private health insurance from undermining the principle of community rating. These regulations apply to entities involved in insurance business, particularly those offering products that might fall under the definitions of accident and sickness insurance or health insurance as outlined in subsection 67(4) of the Act. The amendments specifically affect the definition of "accident and sickness insurance business" by removing the word "ordinarily" from Regulation 47(1)(b)(ii), which was an oversight that resulted in overly broad categories. Additionally, Regulation 48(2A) is inserted to clarify that certain types of payments, such as death benefits, terminal illness benefits, and benefits due to permanent disability, are not considered health insurance under the Act. These changes are intended to ensure that only legitimate health insurance products are regulated, maintaining the integrity of the health insurance system.
Key Provisions
The National Health Regulations (Amendment) 1997 No. 133 amends the National Health Regulations to clarify the distinction between accident and sickness insurance business and health insurance business. The main operative sections are Regulation 47 and Regulation 48 of the National Health Regulations (subsections 67(4), 47(1)(b)(ii), and 48(2A)). These regulations are designed to ensure that only health insurance business is subject to the provisions of the National Health Act 1953. Regulation 47 excludes certain business from the definition of "accident and sickness insurance business," while Regulation 48 excludes certain business from the definition of "health insurance business." Specifically, Regulation 47 removes the word "ordinarily" from subparagraph 47(1)(b)(ii), which corrects an oversight in a previous amendment that had overly widened the categories of prescribed business. Regulation 48 introduces subregulation 48(2A) to exclude the business of undertaking liability for certain types of payments, including the provision of death benefits, terminal illness benefits, and benefits payable as a result of a permanent disability.
The National Health Regulations (Amendment) 1997 No. 133 imposes several obligations and requirements on parties or entities it governs. It mandates that legitimate accident and sickness or trauma insurance products must be excluded from health insurance business. This ensures that only health insurance products are subject to the regulatory framework of the Act. Additionally, the Regulations require that products that are not intended to be covered by the Act, such as those providing death benefits, terminal illness benefits, and benefits payable as a result of a permanent disability, are clearly excluded from the definition of health insurance business. These obligations ensure that the regulatory framework of private health insurance is not undermined by products designed to avoid it.
Failure to comply with the National Health Regulations (Amendment) 1997 No. 133 can lead to several civil and criminal consequences. The Act provides for penalties to be imposed for breaches of its provisions. However, the specific penalties are not detailed in the explanatory statement. The consequences of non-compliance could include financial penalties, legal action, and other administrative measures as prescribed by the Act. The overarching aim of these penalties is to enforce the regulatory framework and ensure that insurance products are correctly classified and regulated to protect the principle of community rating and the equitable distribution of insurance risks.