Commonwealth Numbered Regulations - Explanatory Statements

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PRIVATE HEALTH INSURANCE (REINSURANCE TRUST FUND LEVY) REGULATIONS 2004 2004 NO. 190

Subsection 11(1) of the Private Health Insurance (Reinsurance Trust Fund Levy) Act 2003 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

There are currently no regulations under the Act, and the Private Health Insurance (Reinsurance Trust Fund Levy) Regulations 2004 implement the levy scheme established by the Act.

The purpose of the Reinsurance Trust Fund levy (the levy) in private health insurance is to provide a form of risk equalisation that supports community rating by making financial transfers from health funds with a lower proportion of high-risk members to health funds with a greater proportion of high-risk members.

Community rating is a central tenet of Government policy for private health insurance. It ensures access for all members of the community, especially those with higher health risks. Premiums would be substantially higher for older Australians and other high-risk groups if private health insurance were risk rated, as it is in New Zealand.

The purpose of the Regulations is to specify a levy day to enable the administration and collection of the levy. It is intended that the levy be collected four times per year.

Paragraph 6(1)(a) of the Act provides that the levy is imposed on each registered health benefits organization on each day specified in regulations as a Reinsurance Trust Fund levy day for a financial year. Subsection 6(2) provides that the regulations must not specify more than 4 levy days for a financial year.

Subsection 11(2) of the Act provides that, before the Governor-General makes regulations under subsection 11(1), the Minister must take into consideration any relevant recommendations made to the Minister by the Private Health Insurance Administration Council. No recommendations have been made regarding the Regulations.

The Regulations establish arrangements for the calculation of the levy, while the National Health (Private Health Insurance Levies) Regulations 2004, which are the subject of a separate Minute, establish arrangements for the payment of the levy.

Details of the Regulations are set out in the Attachment.

The Regulations commence on 1 July 2004. The Act received the Royal Assent on 15 July 2003 and will commence on 1 July 2004.

Subsections 4(1) and 4(2A) of the Acts Interpretation Act 1901 read together, provide that regulations may be made between the passing and commencement of legislation upon which they rely for their authority, as long as such regulations do not commence before that legislation.

ATTACHMENT

DETAILS OF THE PRIVATE HEALTH INSURANCE (REINSURANCE TRUST FUND LEVY) REGULATIONS 2004

Regulation 1 names the Regulations as the Private Health Insurance (Reinsurance Trust Fund Levy) Regulations 2004.

Regulation 2 provides for the Regulations to commence on 1 July 2004.

Regulation 3 provides that, for the purpose of the Regulations, Act means the Private Health Insurance (Reinsurance Trust Fund Levy) Act 2003 and quarter means the period of 3 months ending on the last day of March, June, September or December.

Regulation 4 provides that the Reinsurance Trust Fund levy day, the day on which the levy is imposed, is the 21^st day of the second month of each quarter in a financial year.