Private Health Insurance (Council Administration Levy) Amendment Rules 2015 (No. 1)

EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Health and Minister for Sport

Private Health Insurance (Council Administration Levy) Act 2003

Private Health Insurance (Council Administration Levy) Amendment Rules 2015

(No. 1) 

Authority

Section 9A of the Private Health Insurance (Council Administration Levy) Act 2003
(the CAL 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 CAL Act, or necessary, or convenient to carry out, or give effect to the CAL Act.

The CAL Act provides for the Rules to specify the rate of the Council Administration Levy (the CAL), the CAL days and the census day.

Pursuant to section 307-10 of the Private Health Insurance Act 2007 (the PHI Act) the purpose of the CAL is to meet the general administrative costs of the Private Health Insurance Administration Council (PHIAC). The CAL is imposed on registered private health insurers conducting health insurance business.

Purpose

The Private Health Insurance (Council Administration Levy) Amendment Rules 2015 (No. 1) (the Amendment Rules) impose a nil CAL for the final instalment of the 2014-15 financial year.

Background

The 2014-15 Budget measure “Smaller Government – additional reductions in the number of Australian Government bodies” announced that PHIAC would merge its prudential regulatory functions with the Australian Prudential Regulation Authority (APRA) from
1 July 2015.

In anticipation for the merge to occur on 1 July 2015 Government has sought to reduce the amount of PHIAC cash transferred to APRA on 1 July 2015.  Through consultation with APRA, Treasury, Department of Finance and PHIAC, it was agreed that the current cash balance is surplus to the requirements of APRA. 

The purpose of the Amendment Rules is to waive the final instalment of the CAL for the 2014-15 financial year in order to reduce the amount of cash held by PHIAC at 30 June 2015.

Details

Details of the Amendment Rules are set out in the Attachment.

Consultation

Industry and consumers were not consulted in relation to the proposed amendments to the CAL. This was a decision of Government having regard to the needs of PHIAC and the importance of appropriately resourcing prudential regulators.

Advice received from the Office of Best Practice Regulation (OBPR) on 25 March 2015 confirmed that the changes to the Rules were considered to be minor as there appears to be no compliance cost changes associated with this proposal and are therefore exempt from the Regulation Impact Statement requirements (OBPR reference 18836).

Consultation was undertaken with APRA, Treasury, Department of Finance and PHIAC with regards to the imposition of a nil CAL in the final quarter of the 2014-15 financial year.

The Amendment Rules commence on the day after registration.

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

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

DEPARTMENT OF HEALTH

APRIL 2015

ATTACHMENT

DETAILS OF THE Private Health Insurance (Council Administration Levy) Amendment Rules 2015 (No. 1)

Section 1 Name of Rules

Section 1 provides that the title of the Rules is the Private Health Insurance (Council Administration Levy) Amendment Rules 2015 (No. 1) (the Amendment Rules).

Section 2 Commencement

Section 2 provides that the Amendment Rules are to commence on the day after registration.

Section 3 Authority

Section 3 provides that the Amendment Rules are made under the Private Health Insurance (Council Administration Levy) Act 2003.

Section 4  Schedule - Amendment of Private Health Insurance (Council Administration Levy) Rules 2007

Section 4 provides that the Schedule to the Private Health Insurance (Council Administration Levy) Amendment Rules 2015 (No. 1) amends the Private Health Insurance (Council Administration Levy) Rules 2007.

Schedule - Amendments

Item 1 of the Schedule substitutes sub-rule 6(1) of the Private Health Insurance (Council Administration Levy) Rules 2007 as follows:

(1) The rate for a single policy for a quarter mentioned in column 2 of the following table is the amount in cents worked out using the formula in column 3 of the table.

Item 2 of the Schedule substitutes sub-rule 7(1) of the Private Health Insurance (Council Administration Levy) Rules 2007 as follows:

(1) The rate for a joint policy for a quarter mentioned in column 2 of the following table is the amount in cents worked out using the formula in column 3 of the table.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Private Health Insurance (Council Administration Levy) Amendment Rules 2015 

(No. 1) 

This legislative instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Private Health Insurance (Council Administration Levy) Amendment Rules 2015 (No. 1) waive the final instalment of the Council Administration Levy (the CAL) for the 2014-15 financial year in order to reduce the amount of cash held by the Private Health Insurance Administration Council (PHIAC) at 30 June 2015 prior to the merger of PHIAC with the Australian Prudential Regulation Authority (APRA).

Human rights implications

The proposed amendments promote the right to health of consumers.

The right to health

Article 12 of the International Covenant on Economic, Social and Cultural Rights “recognises the right of everyone to the enjoyment of the highest attainable standard of physical and mental health”. The steps that should be taken by Parties to the Covenant to achieve the full realisation of the right to heath include the creation of conditions which provide everyone with medical services and medical attention in the event of sickness.

The CAL funds PHIAC’s day to day costs associated with undertaking its functions as set out in the Private Health Insurance Act 2007. Specifically, PHIAC is required to take all reasonable steps to achieve an appropriate balance between the objectives of:

“(a)  fostering an efficient and competitive health insurance industry;

 (b)   protecting the interests of consumers;

 (c)   ensuring the prudential safety of individual private health insurers.”

The waiver of the CAL in the final quarter of the 2014-15 financial year will not impact PHIAC’s ability to foster an efficient and competitive health insurance industry through its ongoing regulatory oversight of the industry. A competitive health insurance industry provides consumers with access to affordable health insurance products, thereby directly promoting the right to health of consumers.

PHIAC’s second objective, of protecting the interests of consumers, directly supports their right to health, by ensuring consumer interests are considered in all key regulatory decisions. 

PHIAC’s third objective, of ensuring the prudential safety of insurers, aims to protect the sustainability of the private health insurance industry. This has a direct impact on consumers by protecting them from financial loss, thereby directly impacting their right to health in a positive way.

Conclusion

The Private Health Insurance (Council Administration Levy) Amendment Rules 2015 (No. 1) are compatible with human rights because it engages with the human rights of consumers of private health insurance, by working to maintain an efficient and competitive private health insurance industry, ensuring product choice and maintaining pressure to minimise premium increases.

The Hon Sussan Ley MP

Minister for Health and Sport