Commonwealth Numbered Regulations - Explanatory Statements

[Index] [Search] [Download] [Related Items] [Help]

NATIONAL HEALTH REGULATIONS (AMENDMENT) 1997 NO. 133

STATUTORY RULES 1997 No. 133

Issued by the authority of the Minister for Health and Family Services

National Health Act 1953

National Health Regulations (Amendment)

Subsection 140 (1) of the National Health Act 1953 ('the Act') provides that the Governor-General may make regulations, prescribing all matters which by the Act are required or permitted to be prescribed.

The purpose of the Regulations is to clarify the distinction between accident and sickness insurance business and health insurance business. The distinction is of importance because only health insurance business is subject to the provisions of the Act.

The effect of the amendments is to exclude legitimate accident and sickness or trauma insurance products from health insurance business, while still preventing other products clearly designed to avoid the regulatory framework of private health insurance from undermining the principle of community rating.

Subsection 67(4) of the Act defines both "health insurance business" and "accident and sickness insurance business". Products that meet the definition of accident and sickness insurance business are not considered to be health insurance. This subsection also provides that business of a kind which is not to be included in the definitions of "accident and sickness insurance business" and "health insurance business" may be prescribed.

The Regulations amend Regulations 47 and 48 of the National Health Regulations and together define the boundaries between accident and sickness insurance and health insurance. Regulation 47 of the National Health Regulations prescribes the kinds of business which are excluded from the definition of "accident and sickness insurance business". Regulation 2 amends subparagraph 47(1) (b) (ii) to remove the word "ordinarily". The inclusion of "ordinarily" was an oversight in a previous amendment and overly widened the categories of prescribed business such that they applied to too wide a range of products.

Regulation 48 of the National Health Regulations prescribes the kinds of business which are excluded from the definition of "health insurance business". Regulation 3 inserts subregulation 48(2A) to exclude the business of undertaking liability for certain types of payments, including the provision of death benefits, terminal illness benefits and benefits payable as a result of a permanent disability, This clarifies that these benefits are not considered to be health insurance and were never intended to be covered by the Act.

BACKGROUND

The previous amendment to Regulation 47 arose from the emergence of proposed products clearly designed to avoid the regulatory framework of private health insurance. The products intended to be caught by the amendment were those purporting to be accident and sickness insurance, but which are, effectively, a form of health insurance with risk rated premiums.

Failure to prevent such products from being offered will lead to insurance policies that undermine the principle of community rating where all members of an insurance table must be charged the same premium regardless of personal characteristics such as age, sex or health status. These proposed products would operate outside the regulatory requirements and would therefore be able to offer lower premiums to the younger and healthier members of the community thus leaving registered health benefits organisations with the sick and the elderly. With the removal of the lower risk members health insurance funds would have to increase premiums thus making insurance too expensive for many of those who require it the most. Risk rated forms of insurance would either be unavailable or prohibitively expensive to those over 65.

The Regulations commenced on Gazettal.