Ian McCauley | PHI: Costs for Public, Private The Same, So They Should Compete for Funds


Private Health Insurance is a clumsy and expensive way to fund health care. With the 2009 Productivity Commission Report finding only a 3% difference in costings for the Public and Private Health Insurance industries, the allocation of resources to private health is essentially privatising taxation, inequitably and inefficiently replicating what the taxation system already practices.

Rather than subsidising private health insurance, health reform will occur when Australia’s perverse incentives are abandoned. Private Health Insurance in the OECD results in greater total health-care costs, no health benefit, and replicates the moral hazard of public insurance without cost discipline possible with a strong single insurer.

To achieve health reform, policy makers and advocates must reject the proposition that private hospitals are dependent on private health insurance.

To read Ian’s full report, click here.

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