Whether the health-insurance rebate is passed in the Senate this week or not, ultimately the Government and the Parliament must face fundamental reform of the way health is financed in Australia.
Both Labor and the Coalition have allowed ideology to get in the way of the practical administration of one of the most important things goverment does: the delivery of health care.
Before the election of the Whitlam Goverment in 1972 the Coaltion allowed a system dominated by private insurance to rule the day. Under it, a large percentage of people could not or would not afford insurance and faced forgoing treatment or huge medical bills that could send them in to penury or bankruptcy. It was unsatisfactory. The Whitalm Govenrment introduced the Medibank universal insurance scheme. It ran for several years until it was unwound to the previous unsatisfactory regime by the Fraser Government. The Hawke Government re-introduced Medicare in 1983. It had the benefit of providing universal care at what seemed a reasonable cost. It took almost a decade until it became obvious that it was unsustainable. The Medicare levy of around 1.5 per cent, was never enough to sustain the benefits paid out. They had to be underwritten by government. Moreover, the system was further underwritten by people who retained private insurance. Private insurance was only of benefit to people with lesser illnesses to who it gave the benefit for queue jumping and treatment in a private hospital. Doctor of choice was an illusory benefit when so many people had no information about who was a good specialist. Serious illness and trauma were invariably better treated in the public system. Eventually more and more people saw the obvious and refused to pay for something the Government gave for nothing. As more people left the private system, the cost of premiums went up and the benefits went down. The surprising thing is that it took so long.
Labor Health Minister Senator Graham Richardson saw the writing on the wall, but his colleagues refused to let him do anything about it.
The first Howard Government fiddled a little, providing $600 million in incentives to get people to say in the private system. Still they left. And now the Second Howard Government, foolishly and against all the evidence, is intending to throw a further $1.5 billion year in a tax rebate for everyone who takes out private insurance. It is utter madness. It will not stop the drift from private insurance. Nearly all of it will go to people who have taken out insurance and will keep it anyway — just like the $600 million subsidy in previous years. Don’t governments ever learn.
To be brutally practical, the Govenrment would end up with more people in private insurance, if it picked a million families randomly out of the phone book and if they were not insured gave them a $1500 private insurance policy. That may sound over the top, but it indicates how foolish the rebate is.
It flies in the face of all of the reasoning that this government has put with repsect to other industries. The most significant reason for privatising a government function, it has argued, is becuae the private sector can do it more efficietly and give greater value for taxpayer dollars. The Howard Government has quite rightly privatised and out-sourced a number of hitherto public-sector functions to give better value for money to the tax-payer. Prime Minister Joh Howard has been a prosletiser of free enterprise standing on its own two feet without requiring the public sector to prop it up. Suddenly, with respect to health insurance, the Government is a sucker for subsisation.
And on the Government’s own admission of that very large subsidiy is not forth-coming more people will leave private insurance. It seems taht private health insurance cannot cut the mustard. To survive it needs protection and government subsidy.
It would be far better to pay the money straight to the hospitals, public and private. This is a subsidy paid for by all (in the former of lower revenue) for the benefit of the few. And in three years time we will be back where we started with the added burden of a rebate system that will be electorally impossible to take away. The Government private insurance subsidy will be merely adding a subsidy on private insurance to the already unsustainable subsidy in the public sector.
The Government must put the private funds on a more equal footing with Medicare. But that would mean increasing the Medicare levy to match the out-goings. It would mean giving an exemption to those who have private insurance which covers the same thing. It would mean an end to community rating, with some proctection for people who have insured for long periods. It would mean attacking the gap. The Government has made a start on that front achieving at least some arrangements between insurers and medical providers that enable the insured to walk away without bills.
In short it requires a flexible, imaginative, realistic approach. It means looking at things like employment-based health insurance. It requires the Government making Australian voters realise that good quality health has to be paid for. It requires the Coalition to acknowledge that the public sector can and does deliver efficient outcomes and is essential in providing a safety net at one end and providing cost-intensive procedures and innovation that the private sector cannot provide and it requires Labor to understand that the private sector has a role in attracting money into the system and to provide services to those who can afford it which the public sector rightly won’t touch.