EXPLANATORY STATEMENT
Select Legislative Instrument 2006 No. 285
Issued by the Authority of the Minister for Health and Ageing
Private Health Insurance Complaints Levy Act 1995
Private Health Insurance Complaints Levy Amendment Regulations 2006 (No. 1)
Section 9 of the Private Health Insurance Complaints Levy Act 1995 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed.
The purpose of the private health insurance complaints levy is to finance the administrative costs of the Private Health Insurance Ombudsman (PHIO). The levy is payable by all registered organisations conducting health insurance business. The Private Health Insurance Complaints Levy Regulations 1995 (the Principal Regulations) currently implement the levy scheme established by the Act.
The Regulations will allow the total levy collected to be increased to cover the expanded functions of the PHIO which have been introduced by the Health Legislation Amendment (Private Health Insurance) Act 2006 (the Amendment Act 2006). The changes are designed to increase the effectiveness of the PHIO in resolving complaints and conducting investigations. The amendments:
- expand the PHIO’s powers to include complaints by, and in relation to, additional health care providers and to include brokers;
- expand the definition of ‘private health insurance arrangements’;
- permit the PHIO to direct participation by the subject of a complaint in compulsory mediation;
- permit the PHIO to mediate between a health fund and a health care provider, including directing participation in compulsory mediation;
- permit the PHIO to require the production of records not only from health funds, but also from health care providers and brokers;
- permit the PHIO to make recommendations to health care providers and brokers; and
- permit the PHIO to make reports or recommendations to the Minister or Department of Health and Ageing about health funds, health care providers and brokers.
Subsection 6(1) of the Act provides that the rate of levy is the rate prescribed by the regulations. Subsection 6(2) provides that the rate is to be based on the number of contributors who contribute to the health benefits fund by means of which a registered organisation conducts its health insurance business. Subsection 6(3) provides that the regulations may specify different rates of levy in respect of contributors who contribute to the health benefits fund for one person and contributors who contribute for more than one person (family contributors). Subsection 6(4) provides that the rate of levy must not exceed:
(a) in respect of contributors who contribute to the health benefits fund in respect of one person - 25 cents per quarter; or
(b) in respect of contributors who contribute to a health benefits fund in respect of more than one person - 50 cents per quarter.
Regulation 5 of the Principal Regulations sets out a formula for calculation of the levy, including the rates payable by a registered organisation in respect of single contributors and family contributors.
Currently, the total levy collected from all registered organisations conducting health insurance business is $1,150,000 per annum. The Australian Government announced, in May 2006, that an increase in the industry levy of $200,000 would be needed to meet the additional cost of running the PHIO due to the expanded powers contained in the Amendment Act 2006. The purpose of the Regulations is to amend the formula which is used to calculate the levy so as to increase the amount collected under the levy by $200,000 to $1,350,000 per year.
No consultation in relation to the Regulations was undertaken because the Regulations do not substantially alter existing arrangements. The Regulations merely increase the amount of levy to be collected. However, extensive consultation with private health insurance organisations was undertaken as part of the consultation process leading up to the Amendment Act 2006.
Details of the Regulations are set out in the Attachment.
The Act does not specify any conditions that need to be met before the power to make the Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments. Although the activities of registered organisations in the period from 1 July 2006 to the date the Regulations are registered will have a consequence for the calculation of the levy applying to an organisation, the Regulations are not intended to impose a liability as at a past date. Rather, the liability to pay the levy will occur after registration of the Regulations (i.e. prospectively).
Authority: Section 9 of the Private Health Insurance Complaints Levy Act 1995
ATTACHMENT
DETAILS OF THE PRIVATE HEALTH INSURANCE COMPLAINTS LEVY AMENDMENT REGULATIONS 2006 (No. 1)
1. Name of Regulations
Regulation 1 provides that the title of the Regulations is the Private Health Insurance Complaints Levy Amendment Regulations 2006 (No. 1).
2. Commencement
Regulation 2 provides for the Regulations to commence on the day after they are registered on the Federal Register of Legislative Instruments.
3. Amendment of Private Health Insurance Complaints Levy Regulations 1995
Regulation 3 provides that the Private Health Insurance Complaints Levy Regulations 1995 (the Principal Regulations) are amended as set out in Schedule 1.
Schedule 1 – Amendments
Item [1]
Item 1 amends the rate for single contributors in subregulation 5(2) of the Principal Regulations, by omitting the current formula and substituting a new formula with a new numerator of 33,750,000.
The formula has been structured to ensure that the rate set for the levy will collect the total amount required despite potential variations in the number and types of contributors. The numerator in the formula is the annual PHIO appropriation multiplied by 100 and divided by 4.
Item [2]
Item 2 amends the rate for family contributors in subregulation 5(3) of the Principal Regulations, by omitting the current formula and substituting a new formula with a new numerator of 33,750,000.
The formula has been structured to ensure that the rate set for the levy will collect the total amount required despite potential variations in the number and types of contributors. The numerator in the formula is the annual PHIO appropriation multiplied by 100 and divided by 4.