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Issue #1799      October 18, 2017

Privatising Medicare

There are around 40,000 private health policies bombarding the “market” as private health insurance companies seek customers and governments cry poor while billions of dollars are siphoned off to subsidise private hospitals through the private health insurance rebate. Without the more than $6 billion a year in federal government taxpayer subsidies the private hospital system receives, it would collapse, virtually overnight.

In a health system announcement by the Turnbull government last week, insurers are to label their packages so it is clear what is in and what is out. So, graded along the lines of Olympic winners and losers, Gold products will cover everything, Silver will have a deductible (excess), Bronze will have exclusions (packages where some conditions, such as orthopaedics or obstetrics are not covered) and Basic. Insurers will now be able to offer discounted “products” to “customers” (the government’s supermarket jargon) as a lure to try and hook people aged between 19 and 29 into private health insurance.

It is timely here to recall that in the 2014 federal budget announced by then Treasurer Joe Hockey, $80 billion of federal health and education funding was cut, Hockey proclaiming the “end of entitlement” and telling the states they could “sink or swim”.

The undermining of the public health system towards its privatisation has seen the public hospital system run down, starved of the necessary funds and resources, resulting in long waiting lists and enormous pressures on staff. The contracting out of all aspects of the running of hospitals has compounded the situation as well as adding to costs.

A combination of long waiting lists, government and insurance company scare tactics and tax incentives have seen an increase in the take-up of private health insurance from less than one third of the population, when the Howard government was elected in 1996, to around half of the population when Howard was thrown out in the 2007 election.

This has resulted in the emergence of a two-tiered health system, with that free-market favourite “competition” resulting in queue jumping by private patients in public hospitals and immediate access guaranteed in private hospitals.

Basic right

Health care is a basic human right. The original concept behind Medicare was a national health insurance scheme that offered universal access to free medical services through a system of bulk billing where patients were not required to pay an upfront fee for service. Access to public hospitals was also free and universal.

The potential of Medicare and the public hospital system has not been realised. Rather there has been deterioration in many areas. Public hospitals are short of staff, resources and beds. There are shortages of GPs and specialists and huge distortions in the geographic distribution of services.

The opening up of such a public-good service as universal public health to allow private system parasites to attach themselves to the system via billions of taxpayer dollars, is completely illogical unless viewed through the prism of profits first, last and always.

The privatisation of Medicare and the public hospital system – including the push for a voucher system – was proposed by the former Howard Coalition government.

In such a voucher system, an estimate is made of the average amount the government pays through Medicare for medical services and for public hospitalisation of individuals. The value of each voucher is then determined taking into consideration individual factors such as age, medical history and chronic conditions. In this scheme of things, the voucher for a healthy 20-year-old would be worth far less than, say, that of a 60-year-old diabetic.

The voucher entitles the customer to basic medical and hospital coverage – what is called a “universal service obligation”. Medicare becomes a safety net, a minimum entitlement.

In 2009, the Rudd Labor government embarked on a major transformation of the health system based on this premise, intended to turn Medicare on its head and firmly embed the private health insurers as managers of a US-style health system. The “reforms” effectively handed 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 industry (the ones being given $6 billion a year of taxpayer money).

The aim was and is to create a health industry in which health care becomes a commodity and public and private providers compete for patients seen (the “customers”) in a market. In this scenario providers are judged and rewarded according to performance measured by such indicators as rapid through-put of customers in a system of vouchers, league tables, failed hospitals and “choice” at the expense of equity, where potential patients select what they can afford and gamble on what health conditions they might develop.

The lure being offered in the Turnbull government’s addition to this privatisation plan is also a reflection of the utter failure of for-profit provision of health services.

It is the promotion of and diversion from public funds to the private, for-profit sector that has resulted in the present, increasingly, untenable situation. This process has been a conscious one on the part of successive governments, both Labor and Coalition, all intent on privatising health care.

Next article – Editorial – Get the “Korea Crisis” straight

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