“The cry of “nanny state” is often used to oppose public health measures that are in the public interest but threaten powerful private interests.

Perhaps the cry of “class warfare” falls into the same category when it comes to social reforms that are in the broader public interest.

That is one question arising from suggestions the Government is unlikely to act on Gonksi’s recommendations for a more equitable, rational basis for funding schools, for fear of being accused of “class warfare”.”

Read the complete article on Croakey: The Crickey Health Blog here.

Read the full article published by The Conversation here

“When the government finally succeeded in its third attempt to remove the 30% subsidy for high-income earners holding private health insurance, the opposition’s response was a promise to restore it should the coalition be voted into office. Tony Abbott said the rebate “is an article of faith for the Coalition. Private health insurance is in our DNA…

Research shows countries that rely on private insurance to fund health care get no better health outcomes – but they spend much more than the countries that rely on the power of a single national insurer and market competition…

Policy makers need to ask not only whether private insurance adds value to health care – and our analysis finds it does not – but also whether it could serve a useful role under any circumstances.

Just as other sectors have had to do, the private health insurance industry should be required to show that in return for budgetary and regulatory support, it can achieve outcomes that could not be gained through other, less expensive means.”

Change can happen faster than you think – help us seize the moment and point to the alternatives. Add your voice to ours!

The policy not only shows that the government is more than prepared to ignore the broad spectrum of advice from experts, but it further stimulates the creation of two tiers of health care in this country. The story is all too familiar, with the PHI subsidies being described in 1998 as “the worst case of public policy ever seen in this parliament” by then Labor member for Jagajaga, Jenny Macklin.

The extent to which Macklin’s analysis was sound in 1998 can be seen in the miraculous unanimity of the public commentary in relation to the most recent agreement to means-test the private health insurance rebate.

At the risk of oversimplifying positions, for your traditional leftie analysis of private health insurance and the changes you could consider the paper prepared by John Menadue and Ian McAuley from the Centre for Policy Development in January 2012. They systematically debunk all the key points raised by proponents of the rebate, demonstrating that the policy is a huge budget burden, has massive administrative costs, has not eased the pressure on public hospitals, has not improved choice and does not reward self-reliance.

Rather than simply focus on means-testing, they advocate that the whole policy is a colossal waste of public resources demanding fundamental revision.

Perhaps a more centrist position might be found in Ross Gittins’s recent piece (The Sydney Morning Herald, 8th February) but alas no. He too explains that subsidising private health insurance doesn’t only advantage the well-off but also contributes to making the health system more expensive overall.

Read the full article in the SMH here

Want some more information on the health care debate? Read John Menadue and Ian McAuley’s discussion paper 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!

Subsidising private health insurance is a clumsy and wasteful way of spending money on health care. The Centre for Policy Development’s Ian McAuley and John Menadue point out in a recent paper that while private health insurers received about $16 billion in premiums last financial year, they only paid out about $13.2 billion in health expenses. The remainder, nearly $3 billion, was simply skimmed off in the form of administration costs (including things that have nothing to do with health care provision, like advertising) and, of course, profits. (I should disclose here that I am a Fellow of the Centre for Policy Development).

Because of its big reach and centralised nature, Medicare has far lower costs as a competing system of health resource allocation. For instance, the sheer size of Medicare means it can effectively set the rates it is prepared to pay for most medical services — a fact perennially hated by doctors and specialists, who would of course prefer to compete in a market where they could use their own collegial advantages to negotiate increased fees. In contrast, highly privatised health systems see rapid cost inflation from health providers.

This is because health is quite unlike many areas of economics, as McAuley and Menadue write today. For instance, customers often have very little information when it comes to making health care consumption decision, but are nonetheless prepared to spend their life savings. The power of doctors to determine the spending of their patients means that over-servicing in many health systems is rife. As a result, health is one of those areas of human life where public provision is generally cheaper than private provision. You only have to look to the US for the key example.

Read the full article in New Matilda here

Want some more information on the health care debate? Read John Menadue and Ian McAuley’s discussion paper 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!

When an industry has become dependent on a subsidy, it uses every means to justify its continuation, exaggerating the consequences if it is withdrawn. Political parties join the bandwagon, and governments, whatever their ideology, feel compelled to go on providing subsidies.

We’re not referring to Alcoa, Toyota or GMH. There is at least some media exposure of subsidies to the aluminium and car industries, and there is some questioning of manufacturing assistance in both the ALP and the Coalition.

Rather, it’s the private health insurance industry, which, for all the sound and fury about the means-testing of the rebate for high income earners, has once again escaped any serious scrutiny of its economic contribution and its tax-funded support — support which costs $4 billion a year, even after the modest trimming associated with means testing.

Read the full article in New Matilda here

Want some more information on the health care debate? Read John Menadue and Ian McAuley’s discussion paper 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!

Research by Mr McAuley and John Menadue published by the Centre for Policy Development reveals that Australians paid $16 billion into private health insurance funds and only got $13.2 billion back in benefits.

The balance went into administration, advertising and profit.

After factoring in tax, the report estimates that 16 per cent of premiums do not go back into healthcare provision, whereas Medicare’s running costs amount to less than 6 per cent.

Mr McAuley says that is not a criticism of how the insurers are run but simply the nature of their business.

“That’s not to say they’re horribly inefficient or gauging the public, it’s simply that’s the nature of the system; they’ve got to compete for customers, they’ve got to make profits on their reserves, they’ve got to hold reserves, they have to maintain front offices and really they’re adding no added value in health care,” he said.

Read the full article in Yahoo! 7 Finance here

Want some more information on the health care debate? Read John Menadue and Ian McAuley’s discussion paper 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!

Quoting CPD’s John Menadue and Ian McAuley from their recent discussion paper Private health insurance: High in cost and low in equity, Michael Mullins, editor of Eureka Street, states that the proposed legislation will not do much to change inequities in the health system as a whole.

“The question of private versus public health insurance is related to the division of the hospital system between public and private hospitals. It has promoted inequity by subsidising, and encouraging queue-jumping by, those who can pay. The poor have only the increasingly dysfunctional public hospitals, while the wealthy can pick and choose.”

Read the full article in Eureka Street here.

Want some more information on the health care debate? Read John Menadue and Ian McAuley’s discussion paper 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!

Mike Steketee in The Australian writes:

“When the Howard government introduced the 30 per cent rebate for private health insurance in 1998, Labor’s health spokeswoman Jenny Macklin called it ‘the worst example of public policy ever seen in this parliament’.

While making allowance for hyperbole, she was right, not that she, or anyone else on the Labor side in Canberra, would dare say it now. The problem was that it was popular. We all like money for nothing, or the illusion of it.

The truth is the rebate costs us a packet as taxpayers and is one of the most unfair government subsidies ever devised. Its cost has risen from an annual $1.5 billion to an estimated $4.7bn this financial year.”

Read the full article in The Australian here

Read CPD’s John Menadue and Ian McAuley’s discussion paper 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!

Gittins picks up CPD’s recent discussion paper and he writes in The Sydney Morning Herald and The Age:

So, just as the Libs now accept the legitimacy of Medicare, so Labor now accepts the legitimacy of taxpayer-subsidised and enforced private health insurance. One of the few remaining ideological gaps has greatly narrowed.

The pity is that, as John Menadue and Ian McAuley explain in a new paper published by the Centre for Policy Development, subsidising private health insurance doesn’t only advantage the better-off (including yours truly), it makes healthcare more expensive than it needs to be.

Healthcare costs to the community – whether funded by the taxpayer or privately – are already growing rapidly and are set to keep outpacing most other costs, becoming by far the greatest pressure on government budgets.

That makes healthcare the greatest source of pressure for rising taxes. Nothing wrong with that – provided we get value for money. But that’s just where private insurance lets us down.

Howard’s subsidy of health fund premiums was really a vote-buying election promise and a gift to the well-insured Liberal heartland. He tried to justify it by claiming that getting more people into private insurance would relieve the pressure on public hospitals.

As all the experts predicted at the time, it didn’t work. It shifted patients from public to private, but it also shifted doctors from public to private, leaving public queues little changed. It did, however, subsidise the better-off in their efforts to jump the queue.

As anyone who’s done high school economics could tell you, the benefit from a government subsidy of the price of something is shared between the buyer and the seller. The health funds have become a lot more profitable than they used to be.

All arrangements that separate the true cost of something from what you appear to pay for it at the counter encourage overconsumption, overservicing and overcharging. That’s true of Medicare as well as private insurance.

But unlike private insurance, Medicare has countervailing advantages. Being a single national payer, it has lower administrative costs and, more to the point, greater ability to counter the market power of healthcare providers.

Our many private health funds have little ability – and little incentive – to counter overservicing and overcharging. It’s a well established principle in health economics that those countries with the greatest reliance on private insurance to finance healthcare have the most expensive healthcare – without a commensurate improvement in their health. The United States is the classic case.

Using carrots and sticks to prop up private insurance not only subsidises a two-class health system, it delivers its greatest benefit to the incomes of medical specialists. Great idea.

“While 64 percent of Australians live in state and territory capital cities, 74 percent of private hospital beds are in those capital cities. By contrast, the supply of public hospital beds is skewed away from capital cities. Because people in country and remote regions are generally not as well-off as city dwellers, this regional imbalance amplifies inequities already in PHI subsidies. Prosperous urban dwellers are being subsidized by less well-off people in rural and outback Australia.”

Read the full article in the Crikey’s health blog, Croakey here