Friday, October 11, 2019

Sickie insurance: push for the boss to cover worker healthcare

Employers would be given tax ­exemptions to pay the private health insurance of workers under a $1.2bn, five-year plan ­developed by health funds to stem the exodus of young people from the private system and limit premium rises.

The funds have also urged the government to restore the private health insurance rebate to 30 per cent of premiums for those aged under 40, amid concerns that low-income earners are facing steeper premium increases than the wealthy.

The proposals are contained in a confidential policy blueprint sent to the government by Private Healthcare Australia. It was developed after extensive surveys with members aimed at identifying why young people were abandoning health insurance.

“The overwhelming perception that people have under the age of 40 is that while they do value their private health insurance … the real issue is it is becoming very expensive given the other costs of living that they have,” said Private Healthcare Australia chief executive ­Rachel David.

Health funds are facing twin pressures of rising payouts as baby boomers increasingly claim on their cover and young people cancel their policies. This is threatening the viability of the community rating system, which ensures that those most dependent on the health system do not face the largest premiums.

“It is very challenging to maintain that system in terms of what we’re facing now, which is record demand for elective surgery in people aged 50 and over, to an ­extent cross-subsidised by younger people,” Dr David said.

“So young people have a sense that they’re paying more for their private health insurance and getting less in return.”

The number of people aged ­between 20 and 39 and holding hospital cover has plunged 6 per cent in the past five years.

PHA wants the government to publicise better its reforms that provide discounts to young people for each year a person is aged under 30 when they first buy hospital insurance.

Health funds say the introduction of a fringe benefits tax exemption for employers purchasing health insurance for their workers would cost the government $585m over five years and could boost young people’s participation by 1.5 per cent.

They calculate that ­restoring the health insurance ­rebate to 30 per cent of premiums for those under 40 would boost the participation rate by 3 per cent, at a total cost to the government of $279m over five years.

The total cost of the industry’s suite of suggested reforms would be $1.2bn. That includes additional items including the awareness campaign, a larger rebate for new members, and the loss of Medicare levy surcharge income for those taking up insurance for the first time. The industry claims savings to the budget from reduced ­pressures on the public hospital system as a result of the reforms would be $308m.

But there are few financial ­incentives for many young people to take up cover. The vast majority of people aged between 30 and 34 earn less than $90,000, and so pay zero Medicare levy surcharge if they choose not to have private cover. They would face a lifetime health cover loading of 2 per cent on top of their premium for every year they are aged over 30 if they do decide to take out hospital cover later in life. But given the rising cost of premiums, many young people are making the calculation that they’d be better off putting money in the bank than paying for health insurance.

The industry has flagged that it will struggle to keep premiums rises to less than 3 per cent next year, as demanded by the federal government.

“To deliver a sub-three premium increase will be challenging, and that’s why we’ve put this proposal to government now, as well as at the same time, another set of proposals around managing costs,” Dr David said.

Health funds have fought to rein in costs by cracking down on what they claim is a record of overcharging by state governments on the bills of privately insured ­patients who are treated in the public hospital system. They have also addressed “overuse and overpayment” of medical devices on the prostheses list.

“We’ve really reached the end of what we can do on our own without strong co-operation from government to assist us in reducing costs and to rebalance the carrots and sticks for younger people to promote diversity in the system,” Dr David said.

The federal government has introduced recent ­reforms to private health insurance aimed at making the system simpler and more affordable. It has simplified the levels of cover, introduced discounts for those aged 18 to 29, introduced higher excesses in ­exchange for lower premiums, and removed unproven natural remedies from the list of items insurers can pay.

A representative for Health Minister Greg Hunt said: “These reforms have helped to deliver the lowest private health insurance premium changes in 18 years in an environment where the cost of health services is increasing.”

Mr Hunt said he would consider the reforms suggested by the industry and pledged to take steps to restore the private health ­insurance rebate to 30 per cent “once the government had a healthy budget surplus”.

Australian Private Hospitals Association chief executive Michael Roff said the 30 per cent ­rebate should be restored for those on low incomes, including young people, without delay. The rebate has dropped to about 25 per cent for many individuals because ­rebates are adjusted annually by an amount that has in recent years been lower than the rate of premium increase.

“We’ve now got this bizarre situation where the people on the lowest incomes actually face a bigger premium increase than people on high incomes,” Mr Roff said.

Opposition Health spokesman Chris Bowen said on Friday that Mr Hunt should call for an independent review of the system. “First the Minister claimed ‘job done’ on private health insurance reform, then he claimed he had a plan to fix it,’’ Mr Bowen said in a statement. “It’s hard to know what the Minister’s claim is this week.

“But what we do know is that under this government out of pocket health costs and wait times for health care are at record highs.

“This is while private health insurance is being abandoned at an alarming rate, leading to increasingly unaffordable costs.  “This government has been sitting on its hands while health costs across the board have been soaring.

“Greg Hunt has the opportunity to do a serious review of the private health system to take real action on pressures facing the system and consumers, and he should do so immediately.’’


Climate protesters thumbing noses at taxpayers

Home Affairs Minister Peter Dutton has lashed climate change protesters who brought chaos to cities across the nation this week as anarchists and fringe-dwellers “thumbing their noses” at the taxpayer.

In an interview with 2GB on Thursday, Mr Dutton said the protesters had become a “major issue” and called on Queensland Premier Annastacia Palaszczuk to tighten laws by introducing minimum mandatory sentencing for protesters.

Mr Dutton said the protesters “didn’t believe in democracy” and would continue to disrupt the community if kept being “given a slap on the wrist or words of encouragement from the magistrate.”

The Home Affairs minister said Queensland police had more important issues to worry about such as domestic violence and encouraged officers to recoup the financial cost they had incurred by trying to keep the protests at bay.

“The police need to take civil action against these individuals, they need to recover the full cost of the police response to these individuals, and they need to enforce this by the courts,” Mr Dutton said.

He said the protesters did not believe in democracy and doubled-down on his calls to scrap their welfare payments.

Employment Minister Michaelia Cash opened the door to cancelling government payments after an activist described herself as a “full-time protester”. Senator Cash told 2GB “taxpayers should not be expected to subsidise the protests of others.”

“Protesting is not, and never will be, an exemption from a welfare recipients obligation to look for a job,” Senator Cash said. “If they’re on welfare and they’re choosing to protest, as opposed to attending a job interview, the answer is yes the system can identify them.”

Liberal senator Eric Abetz also weighed in on the protest action telling Sky News Extinction Rebellion should be renamed “Extreme Rebel” as they had behaved in a way that was detrimental to their cause.

“The behavior is in a manner that I think that turns off the vast bulk of Australians, what they are doing is an injustice to their own cause,” Senator Abetz said. “Demonstrate by all means, but do so without inconveniencing your fellow citizens.”

When asked whether there were similarities between the climate protest and that of Israel Folau, as both instances had seen the defence of a cause “disrupt” work places, Senator Abetz defended the rugby star.

“I believe that people ought to have the capacity to have freedom of expression, such as Izzy Folau should have,” he said. “Similarly, those that want to believe in Extinction Rebellion, they similarly can put forward their point of view, but you don’t do that by disallowing people from going about their normal commute”.


Labor at war over climate change deal

Labor is at war over how best to deal with climate change with a call by Hunter Valley MP Joel Fitzgibbon to adopt the Morrison government’s emissions targets being slapped down as a breach of the Paris Agreement by climate change spokesman, Mark Butler.

Mr Butler — a key ally of Opposition Leader Anthony Albanese — issued a blunt rebuff to Mr Fitzgibbon who said Labor should match the higher end of Scott Morrison’s target to reduce carbon emissions by 26-28 per cent on 2005 levels by 2030.

Mr Fitzgibbon is also shadow resources minister and his seat of Hunter was one of many in NSW and Queensland where workers in the coal industry have deserted the ALP.

But in a sign of the divisions within Labor, Mr Butler told The Australian that the Paris Agreements were a bedrock position for the ALP, even with the review into the year’s electoral wipeout still underway.

Mr Butler said Labor should not make any major decisions on its climate change policies while its internal review is underway and that any future policy changes must remain consistent with the Paris targets.

“We know that the government’s targets were not formed on the basis of advice but were dreamed up by Tony Abbott and if they were adopted around the world they would increase global warming by 3 degrees,” Mr Butler told The Australian. “That’s why Labor has been consistently opposed to the target that is fundamentally inconsistent with the Paris agreement.”

Asked if the Fitzgibbon plan breached the Paris protocols, Mr Butler simply said: “Yes.”

“While Labor is reviewing all of our policies, we remain committed to the principles of the Paris Agreement,” he said. “That means taking action to get global climate increases below 2 degrees and towards 1.5 degrees and having long term and medium targets that are consistent with that goal.”

The Fitzgibbon plan has won scant support within the party but senior MPs told The Australian that Mr Fitzgibbon was right that Labor needed to reconnect with traditional blue-collar voters in regions that had historically been reliant on coal.

However, one MP said that the policy review did not mean policy “fundamentals” were up for grabs. “We are not going to walk away from Paris in the same way we are not going to walk away from fair workplace laws or Medicare,” one figure said.


Shareholder citizens are in need of a new champion

Margaret Thatcher conceived and implemented “shareholder demo­cracy” in the 1970s to cure a stifling socialism that was killing Britain’s future.

Adapting that Thatcherite tradition, Bob Hawke, Paul Keating, John Howard and Peter Costello each contributed to building a similar force in Australia. From the early 1990s, a shareholder citizenry emerged when millions of Australians ­invested directly in the sharemarket.

Along with creating wealth and savings for their old age, they ­became genuinely ­invested in sensible economic policies for the country. These are the same quiet Australians championed by Scott Morrison.

Today, new forces are coalescing to undermine Australia’s shareholder citi­zenry. From the rise of industry superannuation funds and the flood of money into private equity and unlisted investments, and the rigid rules killing entrepreneurship on the stock exchange, to laws that turn directors into insurers of last resort, our tradition of having a thriving shareholder community is under threat.

We are witnessing the emergence of a powerful new shareholder class, among them a bolshie subclass with motives more often social and political rather than in the best interests of the company.

These forces should concern government, regulators and stock exchange leaders. Instead, there is only silence while the shifting tectonic plates of wealth creation and savings opportunities create a chasm between small shareholders in listed companies and this booming new class.

The single biggest shift is the flood of investment into unlisted equity, be it short-term private ­equity or longer-term institutional investments such as infrastructure assets. Small investors have no ­direct access to this bonanza.

Analysis by the Business Council of Australia, seen by The Australian, reveals that between the 1990s’ recession and the end of the mining boom, the value of unlisted equity had soared to 250 per cent of GDP while listed equities ­remained unchanged, at about 100 per cent of GDP.

Twenty years ago, private ­equity investments would eventually be sold as a listed business, shares available to all investors, big and small. Today, more and more private equity firms are selling businesses to each other, again ­diminishing the role of listed equities as a source of wealth creation.

Yet Morrison’s quiet Australians — who don’t have direct access to unlisted equity — rely on a broad suite of ASX-listed companies for dividends and capital growth. If the ASX is reduced to a rump, it will necessarily shrink our shareholder citizenry.

Are we awake to the fact when the opportunities for wealth creation shift to an exclusive group of unlisted equity investors, our once deep and wide-ranging shareholder citizenry will shrink?

A diminution in the ASX’s size and relevance ought to at least focus the minds of those running it on how to better attract companies to the bourse. Instead, the ASX is driving business away with layers of tick-a-box rules and endless ­social engineering pursuits that strip control from business owners, stifling entrepreneur­ship and governance innovation.

This makes unlisted investments an entirely rational decision, not only for investors but also for those wanting to run a business, with a plethora of other ill-conceived laws further explaining the exodus to unlisted equity, again at the expense of a thriving shareholder citizenry. Add to that the Australian Securities & Investments Commission’s obsession with securing high-profile scalps on the stock ­exchange, as if there is no bad ­behaviour in unlisted companies.

ASIC’s report on corporate governance, released last week, ­inadvertently points to another existential threat to wealth creation for mum-and-dad shareholders — the continuing focus on “culture” and the growing difficulty for directors of listed companies to be seen, with the benefit of hindsight, to have discharged their duties. The language prescribing what directors must do is so vague, general and aspirational that the standard they are held to now seems to be perfection rather than reasonable care and skill.

In listed companies, directors are becoming the insurer of last ­resort for all the company’s losses. The upshot is that, in practice, ­directors have strict liability where a company becomes insolvent or is found to have breached some law. Realising this, director and ­officer liability insurers are vacating this field or ramping up premiums for lesser insurance coverage, making D&O insurance uncommercial.

This, in turn, will drive good ­directors out of listed companies, leaving second-rate ones to ­become de facto insurers for a company’s solvency, success and compliance. Sure, don’t shed a tear for well-paid directors, but ­remember, when directors can’t do their job, it hits shareholders.

Politicians used to take pride in nurturing this country’s shareholding public. Today, there is ­complacency or cluelessness in Canberra about what is at stake. Does the Prime Minister or Josh Frydenberg understand they might be presiding over the slow and lingering death of our shareholder citizenry? Or have they judged that the political pain of ­defending it against the daily siege of a thousand small but steadily destructive attacks is not worth the long-term benefit to society? Wrong, gentleman. It is worth it. And your legacy here is being ­decided today.

The other force in this perfect storm is the rise of industry super funds. While privatising big government businesses such as the Commonwealth Bank drove Australia’s first tranche of shareholder citizens, Keating planted an improvised explosive device in the system with compulsory superannuation. As union membership dwindles, union-controlled industry funds gather and invest money from workers, amassing huge political and financial power. These undermine the system in two ways. There is an industry-wide shift to invest in private ­equity and other unlisted entities, another ­entirely rational decision in a low-return environment. But the move from direct to indirect investment will ultimately produce a less ­engaged shareholder citizenry.

Industry super funds are also using listed investments as playgrounds for political battles, which does nothing to alter the low-­return environment facing shareholders. Unhappy with govern­ment policy, the social engineers on the boards of industry funds are using members’ money to drive change via the ASX, joining groups such as Climate Action 100+ to dictate decisions at 13 of our biggest listed companies­, ­including BHP, Rio Tinto, AGL, Qantas, South32 and Wesfarmers.

The Morrison government ought to be protecting members’ money. After all, those activists running industry super funds are sidelining shareholders’ interests for their preferred causes such as climate change policies. And why not turn a legislative blowtorch on other equally brazen ­activists masquerading as tax-­exempt charities? While Liberals quiver over GetUp, groups such as the Australian Conservation Foundation and the Australasian Centre of Corporate Responsibility run openly political campaigns against listed companies, undermining shareholder returns. The ACCR holds a small portfolio of shares in a range of ASX-listed companies to campaign for resolutions at annual meetings that have nothing to do with profits, job ­creation or economic prosperity. These social engineers understand that ASX-listed companies are the next frontier for activism, and they are playing a long game.

But where is the Morrison government? Just as Hawke and Keating took risks in the 1980s, as Howard and Costello did the following decade, the test for Morrison and Frydenberg is whether they will correct the course of our shareholder citizenry or allow it to slide further into decline.

Quiet Australians won’t thank them for turning their backs on Thatcher’s proven path to wealth and empowerment.


 Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here

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