The Guardian July 5, 2000


Rise in health insurance premiums tipped

by Kerry Ans

A recent report by the ratings agency Standard and Poors claims that the 
Lifetime Health Cover scheme will only lead to a temporary reprieve for the 
health funds. It states that once waiting periods for new members have 
elapsed there will be increased claims, and this, together with the need to 
raise levels of payments to the struggling private hospitals, will force 
premiums up by about 10 percent.

Standard and Poors are not the only group claiming that the government's 
blackmail and big stick approach to propping up the private health sector 
is fraught with hidden costs and financial risks.

A large number of submissions to last year's Senate hearings into the 
National Health Amendment (Lifetime Health Cover) Bill 1999 pointed to a 
range of concerns about the viability of the plan. Even the Public Officer 
of HCF, one of the big players in the industry, said in evidence that it 
was (and always had been) difficult to predict the effects of any 
"initiatives" put into effect at a particular point in time.

The Howard government has spent $10 million on advertising its Lifetime 
Health Cover plan. The scheme is designed to force middle and higher income 
earners to take out private health insurance, (or pay an additional 
Medicare levy) and to lock them in for life at an early age.

People aged over 30 years joining for the first time after 1 July 2000 will 
pay a loading of 2 percent on their premium for every year of delayed 
entry, except those over 65 years.

This plan follows on from the recently introduced 30 percent rebate to 
private insurers. The rebate amounts to $1.7 billion per annum  a tax-
payer funded subsidy to the health insurance costs of the mainly higher 
income earners.

The management costs of Australia's 44 health funds are nearly $600 million 
per annum, and they have experienced a decade of falling membership (until 
the last few months) and several years of operating losses. Minimum 
increases in health insurance benefits have squeezed the profit margins of 
private hospitals, which derive 80 percent of their revenue from health 
fund payments. Private hospitals have been making losses for many years as 
well.

Creative accountants

The creative accountants engaged by higher income earners will no doubt 
already have advised their clients of flaws in the Lifetime Health Cover 
system. For example, a person may buy a low value policy and up-grade when 
they need to use a hospital (apart from the normal waiting times).

The Howard government's determination to prop up an inefficient and non-
cost effective sector with public funds stands in stark contrast to its 
position on trade policy and tariff cuts. It appears committed to continued 
undermining of the rural and manufacturing sector, by tariff reductions, in 
the name of "free trade", yet it gives effective protection to the private 
health industry.

Undermine Medicare

There has been a long-term campaign to downgrade and undermine Medicare. 
The government claims that it is an expensive model of health insurance and 
that Australians need a "choice" of health provision and cover. Scare 
campaigns about the run-down state of public hospitals add to the perceived 
need for "choice".

In fact the universal nature of Medicare is one of the main factors that 
makes Australia's ranking in a recent World Health Organisation report 
higher than that of other Western capitalist countries who do not have a 
universal health system  the United States in particular.

Choice is Medicare

Australians for the past three decades have indicated that their "choice" 
is Medicare. The Howard government and the private health industry does not 
like this people's "choice", hence the campaign to undermine public 
confidence in Medicare and put in place mechanisms which will eventually 
undermine it.

A recent ACTU survey of union members showed that 95 percent of those 
surveyed believed Medicare should be retained as the fundamental pillar of 
the health care system. 

The ACTU June Congress called for sufficient funds to provide quality care 
for all Australians and their families. They should also be saying that the 
private health sector charge a normal "fee-for-service" and not rely on 
taxpayer subsidies to survive in the "market place".

The 30 percent rebate and Lifetime Health Cover plans are just two of a 
number of mechanisms being used by the current government to attack 
Medicare.  

However, active public support for Medicare against further attacks is 
being built by a national alliance called "Friends of Medicare", which 
brings together the Public Health Association, the Australian Nurses 
Federation, the Doctors' Reform Society, the Women's' Health Network and 
the Australian Council of Social Service. 

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[Readers can obtain printed copies of an information kit on the campaign by phoning (02) 6285 2373].

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