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Issue # 1423      12 August 2009

Medicare Select

Rudd’s privatisation of health

The Rudd Labor government has embarked on a massive transformation of the health system in Australia that will turn Medicare on its head and firmly embed the private health insurers as managers of a US-style health system. The “reforms”, as the government describes them, will effectively hand over the Medical Benefits Scheme (Medicare), the Pharmaceutical Benefits Scheme (PBS), a new dental scheme, and public and private hospital cover to the private health insurance (PHI) industry.

The aim is to create a health industry in which health care becomes a commodity and public and private providers compete for patients seen as “customers” in a market. Providers will be judged and rewarded according to performance measured by such indicators as rapid through-put of customers, not quality of care. It will be a system of vouchers, league tables, failed hospitals and choice at the expense of equity, where customers select what they can afford and gamble on what health conditions they might develop.

The key elements of the government’s program are outlined in the final report of the National Health and Hospitals Reform Commission (NHHRC) which the Prime Minister and his Health Minister Nicola Roxon released on July 31. It is economic rationalism (neo-liberalism) at its worst, where health care is treated as a commodity and the public sector is there to subsidise an unsustainable private system and ensure its profitability. The new Medicare Select means that customers – the people of Australia – will be able to “select” what medical services their health insurance covers them for – their choice only limited by their ability to pay.

The nature of the report is not surprising; its chair, Dr Christine Bennett, has a background in the private health care industry. In June 2008, while the Commission was undertaking its review, Dr Bennett was appointed as Chief Medical Officer of BUPA Australia Ltd. Its brand names include MBF and HBA which are two of the largest private health insurance funds in Australia. The PHI industry should be very pleased by the Commission’s work.

The report correctly identifies areas of pressing need such as mental illness, dental health, aged care, Aboriginal and Torres Strait Islander health, hospital emergency services, hospital waiting lists, etc. It stresses the importance of early intervention and preventative measures. It identifies other needs such as training of more health professionals, funding of research, centralisation of knowledge and a multi-disciplinary approach in the treatment of patients with chronic and complex conditions. Its proposes additional spending in these areas which could be of considerable benefit, depending on how the money is spent.

The Commission notes the two-tiered nature of the present system which advantages those who can afford private health insurance and avoid waiting lists. But its system will only perpetrate the two-tier system and widen the gap as the insurance industry extends its grip into new areas.

Choice for some

Every Australian will automatically belong to a government operated health and hospital plan under a voucher system. They can then select to move to a not-for-profit or PHI fund of their own choosing. The insurance fund would receive a “risk-adjusted” allocation of funds for each member – the amount would vary depending on the age, medical history, and other possible risk factors of the individual. For example, the allocation for a 60-year-old diabetic would be larger than for a 25-year-old who visits the doctor once a year.

The payment is attached to the individual – hence the term voucher. It is the government’s contribution towards payment of medical and hospital services. This voucher covers a very basic level of cover, referred to as “universal service entitlement”. This is a minimal safety-net.

When someone visits a GP, has a blood test, etc, the health fund not Medicare pays the rebate to the doctor or patient.

Those who can afford it, may buy additional coverage for services not included in the universal service entitlement or to cover the gap between the rebate from the fund and what the medical practitioner charges.

The health funds will shop around on the health market and purchase services from competing public and private providers for their members. A fund may buy places in public or private hospitals for its members. Dr Tim Woodruff, president of the Doctors’ Reform Society, sums it up: “Choice remains a taxpayer subsidised option for the minority of Australians who can afford PHI and can queue jump public hospital waiting lists, whilst the most needy just wait. They have no choice. Vested interests remain untouched.”

The process for determining what is included in the universal service entitlement and level of rebates and who might be eligible for bulk-billed services is not clear. The report stops short of saying that the health insurance companies will be able to determine what procedures a fund member may have and where – as in the US – but that is where it is heading.

The Commission’s report sums up the new system: “`Medicare Select’ would retain a mixed public and private system of financing and service provision, reflecting community preferences. But the private sector would be embedded in the national system, allowing better use of both public and private health resources.” (Section 6.6.1)

In effect, the administration of Medicare is being contracted out to the private health insurance industry.

The Commission’s relative silence on such important issues as bulk billing, the PHI rebate and means testing is of concern. It appears that the 30-40 percent tax rebate for private health insurance will be extended to those taking out additional medical insurance. The report makes reference to co-payments – the gap between what a doctor, pathologist, radiologist or other practitioner charges and the Medicare refund – but leaves it open as to who might still be eligible for bulk billing (no fee at point of service).

Denticare

“The belated recognition that dental care should be a universal entitlement is a huge step forward for many Australians who until now have had no choice but to live in pain, unable to eat properly, waiting years for treatment”, said Dr Woodruff.

Denticare is a separate voucher system which relies heavily on the private sector and will only cover a limited range of services.

Residential aged care is also based on a voucher system to meet “core needs”, where the consumer shops around and pays extra for quality care and services.

PBS

The pharmaceutical industry has been waging a long and hard battle to gain control over the Pharmaceutical Benefits Scheme which evaluates medications, extracts lower prices from Big Pharma and subsidises prescriptions. The Commission raises the idea of decentralising and handing over the PBS’s functions to PHI funds.

ID card

The new“ patient-centred” health system includes the use of unique personal identifiers for centralising and matching up of data by government agencies – prescriptions, visits to doctors, hospital stays, treatments, taxation, social security records, ethnicity, etc.

The individual will have a “person controlled” electronic health record as well as the centralised data. The whole system is voluntary, but government payments are conditional on being part of it!

It is the old ID smart card revisited in the name of “e-health”.

“More with less”

PM Kevin Rudd, in releasing the report, spoke of the need “to drive efficiencies across the health system – so that we can do more with less” and warned that the government would be making some “tough decisions, unpopular decisions and some budget cuts” as it set about returning the budget to surplus. He specifically referred to “difficult trade-offs” in health financing.

The Commission looked at the public hospital system and saw cost savings in the region of 20-25 percent! It acknowledged staffing problems but did not recommend increases in staffing, improvements in wages and working conditions of staff or better resourcing of public hospitals. Funding is so inadequate that nurses in some hospitals have been forced to buy swabs and other basics. The Commission and government clearly have no intention of adequately funding public hospitals.

The government, in its 2009 budget, introduced a number of recommendations made by the Commission in an earlier report. These included additional spending on primary health, Aboriginal and Torres Strait Islander, rural and remote health services, additional funds for research and training of health professionals, and the establishment of GP superclinics. The Australian Health Care Agreement adopted by the Council of Australian Governments in late 2008 laid the basis for some of these more immediate changes.

The Commonwealth proposes to eventually take over the funding of all primary, dental, hospital, aged, mental, and Aboriginal health services from state and local governments. It would create the framework for the distribution of public monies to public and private sector operators but not provide services.

Act now

The government has embarked on a program of consultation with the key participants in the health sector to thrash out more detail and the Commonwealth’s role. The government hopes to gain agreement for its health agenda from the states and territories at a meeting of health ministers in late 2009. If it fails to gain their cooperation Rudd has vowed to take it to a referendum at the next federal elections.

There is still time to raise public awareness and build a campaign to defeat these changes. The people of Australia time and again have voted for a genuinely universal Medicare with bulk billing and have indicated they would prefer to pay higher taxes to have a high quality, universally accessible public hospital system and affordable medications.

Dr Woodruff again: “Despite the many excellent ideas within it, this report is ultimately about entrenching those [private sector] vested interests, about a long term vision for health care as a commodity to be subject to competition and the market. Swine flu affects us all. We do not need a health industry – we need a health system for all. That will only happen with co-operation, not competition.”

Next articleEditorial – Vouchers: headed for the education market place

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