The sums still do not add up on private health insurance. Yesterday the Private Health Insurance Administration Council announced the third consecutive quarter of increases in private health insurance cover from a record low of 30.1 per cent of Australians in December 1998 to 30.9 per cent now. The last quarter’s increase was from 30.5 percent. Though there have been three increases on the trot, they have been very small. They do not justify the Federal Government’s $1.7 billion a year subsidy of private health insurance through tax rebates.
Yesterday’s figures show the rebate scheme is tinkering at the edges. It is a big fat needless subsidy to people who already have private insurance, nearly all of whom had no intention of dropping it.
In the last quarter a further 100,000 people have taken up private insurance. At best this has added $80 million to the health system. It is not a very satisfactory outcome for such a huge financial input by the Federal Government. The $1.7 billion would have been better spent by putting it directly into public hospitals or even putting some of it into private hospitals.
All the evidence and expert opinion in the private health insurance industry points to three main reasons why people are not taking up private health insurance. The first is the gap. People with private cover are still finding themselves with unacceptably high bills after a hospital episode. The government and the funds have addressed this in a minor way but if the government had used the same strength of action as it did with its subsidy the impact on health insurance rates would have been more dramatic.
The second is the high cost of premiums. This, too, has been addressed in a minor way by an adjustment to flat community rating but not nearly enough has been done to provide the young, fit and healthy with acceptably priced premiums that bear a reasonable resemblance to the small risk they present. The high cost of premiums could also be addressed if the government would permit privately insured people to carry their public-hospital equivalent benefit with them when they go to a private hospital.
The third is the very generous Medicare arrangements, subsidised by general taxation. Why bother insuring?
Both Labor and Liberal governments have failed to address the gradual decline in the health system of Australia. Both have been clouded by ideology. Labor has not given enough kudos to the private system and the Coalition is hell-bent on undermining the public system. The only thing that has prevented the Coalition from engaging in a wholesale destruction of the public system is that it would cost it too many votes.
The public hospital system needs more money. The Medicare Levy must be increased substantially. The private sector must be given more freedom over premiums and health delivery. And the public and private systems must be put on a more competitive footing.
Yesterday’s figures reveal the failure of the latest major health-insurance policy initiative. It is now time for a major re-think – one that will take more notice of independent expert opinion. Australia’s health system remains one of the best in the world but if present trends continue that position will be threatened.