Commonwealth Numbered Regulations - Explanatory Statements

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NATIONAL HEALTH REGULATIONS (AMENDMENT) 1995 NO. 408

STATUTORY RULES 1995 No. 408

Issued by Authority of the Minister for Human Services and Health

National Health Act 1953

National Health Regulations (Amendment)

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

The purpose of this amendment is to clarify the definition of businesses of a kind prescribed not to be accident and sickness insurance business as defined under section 67(4) of the Act. This clarification is necessary to prevent products clearly designed to avoid the regulatory framework of private health insurance from undermining community rating. The products intended to be caught are 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. These products would 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.

Regulation 1 provides that the Regulations will amend the National Health Regulations.

Regulation 2 amends Subregulation 47 (1) in the National Health Regulations.

The amendments to subregulation 47 (1) specify as health insurance business, those products that define insured events in terms of requiring hospitalisation or medical services even though payment of benefits may not be contingent on hospitalisation or treatment actually occurring, or on the insured actually requiring such treatment or on fees and charges being payable by the insured in relation to such treatment.

The amendments are not intended to classify as health insurance business either genuine accident and sickness insurance or disability insurance products. As a safeguard against accidentally misclassifying such products where they are not already covered by the definition of accident and sickness insurance, the Minister has the power under section 67(4) of the Act to prescribe certain kinds of business not to be health insurance business.

The proposed Regulations will take effect on Gazettal.