Government proposals to apply a means test to private health insurance subsidies have re-ignited the debate about the role of private insurance.
Download the new CPD discussion paper ‘Private Health Insurance: High in cost and low in equity‘
In our present system the vast majority of subsidies disproportionately benefit the well-off. Country people with poor access to private hospitals subsidize high-income city dwellers with private hospitals around the corner. Richer people who can afford private health insurance are more likely to purchase it, and they get a disproportionately high subsidy as a result. Meanwhile basic services like dental care are subsidised for Private Health Insurance policy-holders, but barely accessible to people on low incomes.
The proposals have shortcomings, however, because they don’t go far enough. They would have hardly any impact on membership of private insurance, they would sustain a separation of private and public hospitals, and they would sustain a social division with one hospital network for the well-off, and another for the other 45 percent of Australians. This division is at odds with the Government’s social inclusion policy.
Private health insurance is an expensive and clumsy way to do what the tax system and Medicare do so much better – that is to distribute funds to those who need health care. In itself it is an expensive financial overhead – a $3 billion annual burden on the health care system. Its even greater economic impost is its general impact on the cost of health care. International experience shows that private health insurance buys more expensive health care than tax-funded health insurance, but it doesn’t buy better health care.
Nor has the increased uptake of private insurance succeeded in its claimed purpose of easing pressure on public hospitals. That was an impossible task, because while demand has indeed shifted to private hospitals, so too have health care staff. The main result has simply been a re-shuffling of the queues for limited resources, and that re-shuffling has put private insurance membership ahead of clinical needs.
In this discussion paper John Menadue and Ian McAuley explain, in simple terms, why a single national insurer provides the most efficient and equitable way for Australians to share our health care costs.
Download ‘Private Health Insurance: High in cost and low in equity‘
Change can happen faster than you think – help us seize the moment and point to the alternatives. Add your voice to ours!
John is a founder and Board Director of the Centre for Policy Development. He was formerly Secretary of the Department of Immigration in the Fraser Government 1980 – 1983, when the Immigration Minister was Mr Ian McPhee. John was also previously Secretary of Prime Minister and Cabinet under Prime Ministers Gough Whitlam and Malcolm Fraser, Ambassador to Japan, and CEO of QANTAS. More recently, John shared his insights into to the story of Australia’s multicultural mix in the SBS documentary series Immigration Nation.John is co-author of CPD's report 'A New Approach: Breaking the Stalemate on Refugees & Asylum Seekers.'You can find more articles and a copy of John's biography 'Things You Learn Along the Way' on his site here: http://www.johnmenadue.com/
Ian McAuley is a contributing author to CPD’s recent publication More Than Luck: Ideas Australia needs now. Ian’s chapter Living off our resources looks at how we use our resources in an era where environmental capital is fast-becoming our scarcest resource of all. Ian lectures in Public Sector Finance at the University of Canberra. His research interests are in public policy, with a specialisation in health policy. His academic qualifications are in engineering and business management from Adelaide University and in public administration from Harvard University. Besides his academic work, he has assisted consumer and welfare organizations in financial and economic policy matters. He has been a strong advocate for integration of the components of health care into a coherent consumer-focussed system. He has been a critic of successive governments’ piece-meal approaches to health policy, particularly the government’s subsidies for private health insurance because they bring neither the benefits of market competition nor the benefits of strong government control. Ian is co-author of a number of papers for the Centre for Policy Development, including ‘Reclaiming our Common Wealth: policies for a fair and sustainable future‘, ‘A Health Policy for Australia: reclaiming universal care‘ and ‘You Can See a Lot By Just Looking: Understanding human judgment in financial decision-making‘.
Pingback: Mike Steketee | Health Rebate A Very Unfair Plan
Pingback: Michael Mullins | Means Test Won’t Fix Health Funding
Pingback: Sebastian Rosenberg | Stop Tinkering, Start Reforming
Pingback: Ian McAuley and John Menadue | Are Private Health Subsidies Worth It?
Pingback: Ben Eltham | Baby Steps on Health Reform
Pingback: Michael Janda | Experts size up effects of health rebate changes