Communist Party of Australia


The Guardian

Current Issue

PDF Archive

Web Archive


Press Fund


About Us

Why you should ...

CPA introduction

CPA Policies

CPA statements

Contact Us

facebook, twitter

Major Issues





Climate Change



What's On







Issue #1780      June 7, 2017

Privatising Medicare

For-profit parasites

The private health system is in crisis and the public system is stretched beyond its limits with long waiting lists for hospitals. With that equation in mind, the federal government continues its concerted push to privatise the public hospitals and Medicare.

Doctors continue to abandon bulkbilling or rush patients through their surgeries to make their practices viable after decades of frozen or below inflation increases in the Medicare rebate.

The announcement in the 2017-18 budget last month that the freeze on rebates would be lifted made a great headline. But that is all it was – a headline with little relief in sight.

GP rebates will not be indexed for another 12 months, and that will only be by a few cents, not dollars. Indexation for specialist and other medical services does not commence for three years.

Health a commodity

In the year to March 2017, 11 million people (46.5% of the population) had PHI coverage for hospital treatment and 6.6 million had coverage for general treatment – also referred to as “extras” – which includes services such as physiotherapy, dental, optical and other services.

The for-profit, private hospital system would have collapsed years ago if it were not for the billions of dollars of taxpayer subsidies handed out by the government every year via the private health insurance (PHI) rebate.

This rebate ranges up to 35 percent of the PHI premium, depending on age and income. The rebate presently costs the government $6.5 billion per annum and is uncapped.

Fund members paid a total of more than $22.8 billion in premiums in 2016. The health funds paid out $19.5 billion in benefits. The funds spent $2.1 billion on expenses – claims handling, offices, advertising, CEO packages, etc, none of which contributed to hospital treatment.

Their total pre-tax profit was more than $1.76 billion – up 19 percent on the previous year! PHI is big business. So too are the private hospital chains that feed off the patients and PHI.

Fund members not only paid a total of $22.8 billion in premiums but they were out of pocket by more than $290 million.

The industry is sitting on $13.6 billion in assets. It is required to hold assets, as are other types of insurance companies for prudential reasons. (Statistics from APRA Private Health Insurance Quarterly Statistics, March 2017)

PHI crisis

Premiums have been rising at an average of more than five percent over recent years, with more than 40,000 different combinations of what services are covered by a total of 37 funds. In addition, different funds have different arrangements with different hospitals, dentists, etc, and then there is where the specialist your GP recommends operates.

The policies on offer also vary widely in price.

It is a minefield for anyone deciding to have PHI cover.

There is mounting dissatisfaction with private health insurance. Rising costs and concerns about long waiting lists in the public hospital system are driving many people into what can only be described as “junk” PHI policies.

There are PHI policies, for example, that only offer cover in public hospitals! Officially you join the waiting list, limping around on your painful knee or with a gall bladder that keeps flaring up, etc, just like everyone else. The difference is that you have a choice of doctor.

The public hospital system is increasingly taking private patients for which it is paid. In 2014-15 it received around $1 billion from PHI companies. Each private patient is lengthening the queue, not easing pressure on the public hospital system.

There is a growing tendency for people with private cover, even comprehensive cover, to use public hospitals because of out-of-pocket expenses and stagnant or shrinking wages. Also the treatment is often superior.

Choosing a policy becomes a guessing game about what you might be needing into the future.

The former Howard government’s Lifetime Health Cover (LHC) loading has succeeded in driving a large number, when they reach the age of 30, into the PHI system.

Under the LHC loading, an extra two percent is paid on PHI premiums for every year over 30 when joining, up to a maximum of a 70 percent loading. The extra cost remains in place for 10 continuous years.

Big business

The public hospitals and health insurance funds are big business, highly monopolised and turning over billions of dollars a year. Their driving motive is profits not patient care. Medibank Private’s operating profit rose by more than 50 percent to more than $510 million last year.

BUPA, a global corporate, increased its health insurance profits in Australia by nine percent. It now has over four million members.

NIB, one of the other major players, lifted its first half net profit to December 2016, by 65 percent to $71.1 million.


These parasites have their eyes on bigger profits through the privatisation of the public hospital system and Medicare.

The big debate within government ranks is not whether to privatise but how to go about privatising the public health system without providing the ammunition for another “Mediscare” campaign and possible defeat in the next federal elections.

Department of Health Secretary Martin Bowles and his deputy Mark Cormack are members of a secretive, “independent” taskforce formed to develop the policy around a “Commonwealth Hospital Benefit” (CHB).

Bowles recently told the Senate Estimates Committee that he set up the “independent” taskforce and that the department paid $55,000 for a contract with Global Access Partners (GAP).

When the Sydney Morning Herald revealed its existence and aims, Health Minister Greg Hunt moved quickly into damage control, denying the government would ever carry out such an overhaul. But the taskforce is reportedly still working on a CHB.

To pave the way for the public to accept the next round of regressive changes and cuts to the public health system, the government and media are still peddling the lie about unsustainable, run-away spending on health services.

The numbers do not stack up to support the government’s claims. Health costs have risen and will continue to rise with an increase in the population and technological advances.

The government is not tackling the truly unsustainable, runaway spending on war preparations – $1 trillion over 20 years – and the unsustainable reliance on fossil fuels.

Whether or not Hunt would attempt such a plan, it is clear the government is committed to spending less on public hospitals and on privatising the health system.

The proposed CHB resembles a voucher system with a value attached to each procedure or service. The federal government would combine the present $20 billion or so it provides for public hospital funding, the $3 billion paid to doctors in private hospitals along with the $6.5 billion subsidising the PHI.

These funds would be used to pay a standard benefit for services regardless of whether they were performed in a public or private hospital or if the patient was being treated as public or private.

At present the government contributes 38 percent of the public hospital funding and the states 53 percent with the remainder from private sources such as insurance companies. In the early 1990s the ratio was 50 percent each, but there has been a gradual erosion by successive federal governments, placing a greater burden on the states and the pockets of individuals.

A leaked report from the taskforces suggests that this federal funding would decline to 35 percent. At present federal funding towards the cost of public hospitals is conditional on there being no out-of-pocket costs for patients. It is unclear whether this would be maintained or there would be a co-payment, possibly means tested.


The PHI and private hospital systems are draining the public purse. The government and corporate media talk endlessly about an unsustainable public system, about run-away costs. That is nonsense.

The private system is unsustainable. It is inefficient, wasting billions of dollars that are drained from the public hospitals and other public health services.

Just look at the wastage of PHI:

  • $6.5 billion PHI rebate paid by taxpayers
  • $22.8 billion paid in PHI premiums
  • $7 billion in PHI assets not contributing to health care
  • $ $290 million members’ out-of-pocket expenses
  • $2.1 billion in PHI company expenses
  • $1.76 billion in operating profits

To do a little more number-crunching, those last two figures play no role in hospital treatment. That is almost $4 billion or 17 percent of the premiums could be put to better use – i.e. treating patients.

The wastage is even worse than that. The private hospital system creams off its profits and notoriously pays more than the public system for the same prosthetics, instruments and other products it uses in surgery and the care of patients.

In all the debate about cost-cutting in the public system and driving more people into PHI, the key issue is not addressed: what will result in the best outcomes for patients.

The answer is simple: the public health system where the profit motive is removed.

If the PHI rebate were phased out and the government made substantial cuts to its military budget of $1 trillion over 20 years there would be more than enough to fund state-of-the-art public hospitals, to adequately equip and staff them and provide world-class care.

The Medicare levy should be abolished. It was never set up to fund Medicare. The use of it to fund the National Disability Insurance Scheme is insulting to its beneficiaries.

The NDIS, like public health services, should be funded out of central revenue through a progressive taxation system. That means ending the fossil fuel subsidies to the mining corporations who rip out our resources and increasing taxes on the profits of large corporations and the wealthy.

With universal access and universal bulk billing millions more dollars could be saved without the costs of processing claims, managing offices, and layers of profit that are built into the private system.

Next article – Editorial – One Voice

Back to index page

Go to What's On Go to Shop at CPA Go to Australian Marxist Review Go to Join the CPA Go to Subscribe to the Guardian Go to the CPA Maritime Branch website Go to the Resources section of our web site Go to the PDF of the Hot Earth booklet go to the World Federation of Trade Unions web site go to the Solidnet  web site Go to Find out more about the CPA