Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1)

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Health and Ageing

Private Health Insurance (Council Administration Levy) Act 2003

Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1)

Section 9A of the Private Health Insurance (Council Administration Levy) Act 2003 (the Act) provides that the Minister may, by legislative instrument, make Private Health Insurance (Council Administration Levy) Rules (the Rules) providing for matters required or permitted by the Act, or necessary or convenient in order to carry out or give effect to the Act. The Act provides for the Rules to specify the rate of Council administration levy, and also specify Council administration levy days, and the census day.  

The purpose of the Council administration levy is to finance the administrative costs of the Private Health Insurance Administration Council (PHIAC).  The levy is imposed on registered private health insurers conducting health insurance business.  An increase in the Council administration levy will support PHIAC’s role under the Private Health Insurance Act 2007, and any other additional activities required to be undertaken by PHIAC as a result of the global financial crisis.

Rules 6 and 7 of the Private Health Insurance (Council Administration Levy) Rules 2007 (the Principal Rules) contain a formula specifying the rate of the Council administration levy. 

The Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No.1) (the Amending Rules) amends the formula in subrules 6(1) and 7(1) of the Principal Rules by:

• amending the numerator of the formula from 110,875,000 to 127,125,000 from 1 July 2009; and
• further amending the numerator of the formula from 127,125,000 to 130,875,000 from 1 July 2010.

Amendments to the Principal Rules will result in an increase in the Council administration levy of $650,000 in the 2009/2010 financial year and a further $150,000 in the 2010/2011 financial year, totalling an ongoing increase in the levy of $800,000 over two years. The amount of increase to PHIAC’s annual budget was determined by reviewing the nature and scope of PHIAC’s future activities.

The rate of levy may be different for complying health insurance policies under which different numbers of people are insured, and may be set at zero, and must not exceed $2 for a financial year where only one person is insured, or $4 for complying health insurance policies under which more than one person is insured.

Details of the Amending Rules to effect this formula adjustment are set out in the Attachment.

Rules 1 to 3 and Schedule 1 of the Amending Rules commence on 1 July 2009.  Schedule 2 of the Amending Rules commences on 1 July 2010. 

The Amending Rules are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

Consultation

Industry and consumers have not been consulted in relation to the proposed increase in the Council administration levy.  This is a decision of Government having regard to the needs of PHIAC and in particular the importance of appropriately resourcing prudential regulators during the current financial crisis. 

Advice received from the Office of Best Practice Regulation (OBPR) has confirmed that the amendments to the Principal Rules is considered minor and machinery in nature and therefore exempt from the Regulation Impact Statement requirements - RIS ID No: 9991.  Nevertheless, a Cost Recovery Impact Statement (CRIS) has been produced for the Amending Rules, and is available on PHIAC’s website (www.phiac.gov.au). 

Authority: Section 9A of the Private Health Insurance (Council Administration Levy) Act 2003
ATTACHMENT

DETAILS OF THE Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1)

1. Name of Rules

Rule 1 provides that the Rule is the Private Health Insurance (Council Administration Levy) Amendment Rules 2009 (No. 1).

2. Commencement

Rule 2 provides that rules 1 to 3 and Schedule 1 of the Amending Rules commence on 1 July 2009 and  Schedule 2 commences on 1 July 2010.

3. Amendment of Private Health Insurance (Council Administration Levy) Rules 2007

Rule 3 provides that Schedule 1 and Schedule 2 of the Amending Rules amends the Private Health Insurance (Council Administration Levy) Rules 2007 (the Rules).

Schedule 1 - Amendment commencing on 1 July 2009

Item [1]  - Subrules 6(1) and 7(1), formula

Subrule 6(1) of the Rules provides that the rate for a single policy is the amount in cents calculated using the formula: 

where:

single coverage policies is the aggregate number of single policies on issue from all private health insurers on the census day; and

joint coverage policies is the aggregate number of all joint policies on issue from all private health insurers on the census day.

Subrule 7(1) of the Rules provides that the rate for a joint policy is the amount in cents calculated using the formula:

Item [1] of Schedule 1 amends subrules 6(1) and 7(1) of the Rules  by changing the numerator of the formula for calculating single coverage policies and joint coverage policies from 110,875,000 to 127,125,000 on 1 July 2009.

Schedule 2 - Amendment commencing on 1 July 2010

Item [1] - Subrules 6(1) and 7(1), formula 

Item [1] of Schedule 1 further amends subrules 6 (1) and 7 (1) of the Rules by changing the numerator of the formula for calculating single coverage policies and joint coverage policies from 127,125,000 to 130,875,000 on 1 July 2010.