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Issue #1880      August 7, 2019

Privatising Medicare

Mark Fitzgibbon, head of the private health insurance (PHI) fund nib, caused a furore when he controversially called for Medicare to be scrapped and compulsory private health insurance to be introduced. He did so in an opinion piece in the Australian Financial Review on July 23. The private health system, despite being propped up by massive subsidies from the government, is proving unsustainable, whereas the public health system, despite years of underfunding, is still the superior system in terms of quality and efficiency.

Photo: Anna Pha.

Last year around 65,000 people, mostly younger fund members, voted with their feet in a mass exodus from PHI cover. Endless hikes in premiums, little or no wages growth, rising out-of-pocket expenses, and an ageing population are contributing to the crisis facing the private sector. In 2018, a number of funds saw a dip in their obscene profits and a few of the smaller ones ran at a loss.

The actual cost of care also continues to rise, with private hospitals paying more for the same equipment and specialists than public ones. Already the government is propping up the PHI system by more than $6 billion a year through its tax rebate to policy holders plus an estimated $3-5 billion by indirect means.

“[The] sensible policy approach would be to make private health insurance compulsory for all Australians with taxation devoted to subsidising the premiums for those who would otherwise be left behind,” Fitzgibbon suggested. “That is, high-income earners would at one end of the scale pay the entire premium while at the other, those with low income fully subsidised.” In other words, Fitzgibbon is calling on the government to privatise Medicare, to hand over the running of its medical insurance, pharmaceutical benefits scheme and other functions to the 38 PHI funds!

The Coalition, as a matter of principle, is determined to privatise everything possible, and that includes Medicare. But it is not proving so easy. The question of privatising Medicare was one of the issues that helped sink the Howard government. Medicare became a major issue in the 2013 federal elections when Labor claimed the Coalition was planning to privatise it. So popular and important is Medicare to the majority of Australians, Labor came unexpectedly close to winning those elections. Those elections were followed by the usual denials and promises by the Coalition that they would never privatise Medicare.

Fitzgibbon’s piece triggered Health Minister Greg Hunt into action: “We are committed to it [Medicare] for life, forever. But equally, we’re committed to private health insurance. Both of those elements are part of the model that best serves Australians.”

Actually, if you look a little deeper, that position may not be so different to Fitzgibbon’s. It comes down to what is meant by Medicare. Governments are well versed in how to keep a name and change the essence of the concept. In this instance, the Hunt variant of Fitzgibbon’s proposal would be to means test Medicare and restrict the admission of public patients to public hospitals to those qualifying for the means tested Medicare. Of course private patients would still be permitted to have private beds in public hospitals as they do now. This would force millions of Australians against their will into PHI.

The government would also pay the PHI funds a direct subsidy for each member – a voucher system – to subsidise refunds on visits to the doctor, x-rays, pathology, pharmaceuticals, etc. It would be a two-tier system, with the wealthier and generally healthier people in the private sector and a run-down public system for those less well off. In fact, Fitzgibbon in his opinion piece, made a direct reference to going down the US path. He forgot to mention how it was the worst health system in the OECD – the most shambolic, expensive, discriminatory, and failed to cover tens of millions of people.

Fitzgibbon, in his Opinion Piece, poses the question: “How do we continue to pay for a ‘universal’ healthcare system with an ageing population, burgeoning spending and ever-increasing dependency ratio of older retired Australians to younger taxpayers? And why the important goal of universal healthcare means government must subsidise everyone irrespective of their income or means.”

The answer is not the Americanisation of Australia’s health system. It is not the creation of a two-tier system based on wealth. It lies in the nationalisation of the health system, restoring the concept of “universal access”, quality care with adequate funding through taxes. Such changes would need to be phased in. The PHI rebate could be redirected to dental and primary health care services. Repeal of the $154 billion in corporate tax cuts would provide more than ample funds for public hospitals, aged care and disability services. Abandoning plans to go to war with the US could see billions of dollars of military expenditure redirected from killing and maiming towards healing and restoring health.

Next article – Living under the nuclear shadow

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