Federalism is bad for our health. The drift from private health insurance is having a huge impact on the ACT health system, particularly Woden Valley Hospital. Public hospitals charge privately insured patients much more than Medicare patients. The trouble is people are dropping out of private insurance. It means that private patients comprise a lower percentage of patients at Woden. They were 41.3 per cent in 1989-90 and only 17.6 per cent in 1994-95, and will fall to 12.6 per cent this financial year. It has meant revenue for Woden Valley has fallen $20 million for providing the same service.
The reasons for people deserting private cover have been apparent for several years. Medicare, which everyone has to pay for anyway, provides virtually the same benefits for catastrophic or life-threatening illness as private cover. Indeed, some private patients end up financially worse off. Seriously ill patients virtually get choice of doctor or are in a situation where choice is irrelevant (their life is threatened and only one is available; or there is only one or two specialists in the town who can treat the patient).
For the bulk of people under 55, it is worth taking the risk of not being insured. About the only thing insurance provides is the ability to avoid waiting lists for non-urgent procedure. For people over about 55, it is therefore worthwhile. So the high-risk patients stay insured and the low-risk ones desert. It means premiums must go up to meet the higher risk. And even more desert private cover.
It means that state and territory public hospitals, which are obliged under the Medicare agreement to take all-comers, get less revenue because Federal health policy has permitted the run-down of private insurance.
The states and territories then cost shift back. They discourage the use of hospital out-patient services. Those people go to GPs instead … and the Commonwealth pays through Medicare. Moreover, the states try to move people out of hospital as quickly as possible, so they get cared for either by joint federal-state-funded domiciliary care or by Medicare.
States are also abandoning health-centre-type care, so it has to be picked up by the Commonwealth through Medicare, but with the result of a narrower range of services for patients.
Present funding arrangements are resulting in federal and state authorities to engage in cost-shifting with the sole aim of improving their budgetary bottom line, irrespective of what might be best for patients. Cost-shifting also result overall in fewer resources for health because of the resulting decline of money coming into the system from private insurance payments. The financial burden for fewer private patients is largely falling on the states; yet only the Commonwealth can do much about it. It shows that it has little incentive to do anything. The only significant policy movement in the past five years in the face of the decline has been to allow insurers to make deals with service providers directly.
State and federal health ministers need to sit down and work out ways to stop this fiasco of cost-shifting. Its effect should not be exaggerated. Australia still has one of the best health systems in the world. However, it will only remain that way if constant attention is given to it.