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2004-2005
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
HEALTH INSURANCE AMENDMENT (MEDICARE SAFETY-NETS) BILL 2005
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Health and Ageing,
the Honourable Tony Abbott MP)
HEALTH INSURANCE AMENDMENT (MEDICARE SAFETY-NETS) BILL 2005
OUTLINE
The extended Medicare safety net came in to effect on 12 March 2004. The extended
Medicare safety net covers 80 percent of the out of pocket costs for Medicare services
provided outside hospital once an annual threshold is met. The Health Insurance Act 1973
currently specifies that, for the purposes of the extended Medicare safety net, a $300
threshold applies to concession card holders and families in receipt of Family Tax Benefit
Part A (FTB(A)) and a $700 threshold applies to all other families and individuals. These
thresholds were indexed on 1 January 2005.
The measure in the Health Insurance Amendment (Medicare Safety-nets) Bill 2005 maintains
the sustainability of the extended Medicare safety net. From 1 January 2006 the extended
Medicare safety net thresholds will increase from $300 to $500 for concession card holders
and families in receipt of Family Tax Benefit Part A (FTB(A)) and from $700 to $1,000 for
all other families and individuals.
FINANCIAL IMPACT STATEMENT
The measures in the Bill have a total saving over 2005/06 to 2008/09 of $499 million.
Estimated savings per year for the extended Medicare safety net is in the table below:
2005-06 2006-07 2007-08 2008-09 Total
($m) ($m) ($m) ($m) ($m)
Total -50.728 -136.057 -150.670 -161.672 -499.127
NB all figures include Administered and Departmental Costs for all agencies
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NOTES ON CLAUSES
Clause 1
Clause 1 provides for the short title of the Act to be cited as the Health Insurance Amendment
(Medicare Safety-nets) Act 2005.
Clause 2
This clause details the commencement date of the Act as 1 January 2006.
Clause 3
Clause 3 specifies that the Act specified in the Schedule is amended by the amendments set
out in the Schedule.
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Schedule 1 - Amendments to extended safety net amounts
The extended Medicare safety net came into effect on 12 March 2004. Under this safety net,
Medicare meets 80 percent of the out-of-pocket costs, for professional services provided out
of hospital, once an annual threshold is reached. The annual threshold is currently $300 (as
indexed) for concessional persons and families in receipt of Family Tax Benefit Part A
(FTB(A)) and $700 (as indexed) for all other persons.
Indexation is applied annually to the thresholds as per section 10A of the Health Insurance
Act 1973 (the Act). In accordance with the legislation the thresholds were indexed on
1 January 2005 to $306.90 for the lower threshold and $716.10 for the upper threshold.
On 12 April 2005, Cabinet agreed that the safety net thresholds would be increased to
maintain the sustainability of the extended Medicare safety net. The increased thresholds
were then announced in the 2005-06 Budget.
The thresholds will be increased to $500 for concessional individuals and families in receipt
of FTB(A) and $1,000 for all other individuals and families.
As the thresholds are to be set at $500 and $1,000 for 2006, indexation will not be applied to
these amounts for 2006, but will be applied from 1 January 2007 and will be indexed
annually thereafter, as prescribed in section 10A of the Act.
Item 1
This item changes the lower threshold from $300 to $500 for concessional families and
individuals. This amendment, and the amendments in items 2 and 3, refers to the nominal
extended safety net amounts in the relevant definitions rather than the indexed amounts. The
indexed amount for the lower threshold is currently $306.90.
Item 2
This item changes the upper threshold from $700 to $1,000 for the general safety net amount
(including both non concessional families and individuals). The indexed amount for the
upper threshold is currently $716.10.
Item 3
This item changes the lower threshold from $300 to $500 for families in receipt of FTB(A).
The indexed amount for families currently in receipt of FTB(A) is $306.90.
Item 4
This item changes the date for beginning the indexation for both the upper and lower
thresholds from 2005 to 2007. This will apply the indexation formula to the amended
extended safety net amounts only for the year starting on 1 January 2007 and annually
thereafter.
Item 5
This item applies the application of the amended thresholds in relation to the time that the
expenses are incurred rather than when they were paid or when a claim is made for
reimbursement under the Act. The Act will continue to apply in its current form, with the
current threshold levels, for any expenses incurred in 2005 or earlier.
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