Graham Richardson is a practical man; not an ideological one. He is also a long-term politician; not a short-term one.
His suggestion this week that private “”gap” insurance should be allowed tilts at the sacred windmills of 25 years of Labor health policy _ free and universal health care.
He did not wake up one morning and decide to spout it on the John Laws show. A least a week ago, he told some health-insurance people to listen to the show carefully. They would not normally be Laws listeners. And then he made sure the Press Gallery got the transcripts.
He wanted to go softly, softly, and not have a full-scale press conference with a big formal announcement. He has been moving since gaining the health portfolio in March to end the grandstanding and battles with the medical profession. He has to if he is to control health costs in Australia and do somethign about hospital queues.
Richardson acknowledged that the flight from private health cover could cause serious difficulty for the Australian health system. He does not want that to happen.
For two decades the doctors and Labor have been poles apart, fighting an ideological battle. Its highest pitch was during the last election with the anti-Medicare, campaign by the Australian Medical Association, then under the presidency of Bruce Shepherd.
Things are different now, and personality has much to do with it. Before the election Brian Howe, from Labor’s left, was minister. He and Shepherd were like oil and water.
Now the AMA is under the presidency of Brendan Nelson. Nelson places far more emphasis on the social side of doctors’ role in the community, such as tobacco, community health, women’s health and so on. He is not the type to throw up his arms and talk about fighting on the beaches.
That is not to say that he is not as worried as Shepherd was about the independence of the profession in fee setting and other matters. The important point is that a new AMA president and a new Health Minister at the same time allowed a thaw in relations and the exchange of olive branches.
Since the election, the AMA has acknowledged Medicare’s essential role and is no longer bent on its destruction. And Richardson has acknowledged there is a role for private insurance, indeed, that there has to be a greater role for it if the Budget deficit is to be controlled or a higher Medicare levy obviated.
On its face, Richardson’s admission, made to an AMA gathering in Canberra last month, on its face runs counter to all Labor has stood for in the past 20 years. However, it is a recognition that the dream of universality means not only “”free” health care for the poor. It also means “”free” health care for the rich.
Richardson has, quite reasonably accepted the equity argument. The public purse should not have to pay for the wealthy. He points out that less than 40 per cent of people are under private cover.
Every well-off person who opts out of private cover and says Medicare will do joins the queue in the public system, competing with the less well off for rare public dollars.
This equity argument will be of great help to Richardson in persuading his colleagues, especially the Left, to change Medicare arrangements in a way that encourages private cover. It will be more persuasive at a time when the other options _ raising the Medicare levy further or pumping more Federal money into the health system _ are untenable.
Gap insurance is important in stopping the drift from private insurance. At present a Medicare patient and privately insured patient can go into hospital and have exactly the same treatment. The Medicare patients gets treatment for nothing, but the private patient gets a bill for out-of-pocket extras and any amount that the doctor charges above the medical benefits schedule (MBS). The MBS is set by the Government and it is illegal to insure for costs above it. The private patient then thinks, why bother with private insurance.
The only advantage of insurance is to avoid the queue for elective surgery. In life-threatening cases, private insurance can be a disadvantage. With gap insurance permitted, at least this disincentive to insure will be removed.
The tricky point comes when gap insurance is related to doctors’ fees. Once people can insure for as much as they like, doctors, it has been argued, will charge through the roof. The gap stops over-charging. The AMA says differently, and to a large extent has history on its side.
About 30 per cent of bills are now above the MBS rate, but 98 per cent are at or below the AMA schedule.
Over the past 10 years or so the gap between the MBS and the AMA has widened. This is largely because the CPI and average wages have gone up faster than the MBS so the AMA has felt its schedule should go up accordingly to keep doctors’ incomes stable.
Richardson clearly has a plan. It may not be detailed, but its broad strategy is to get the government and doctors talking more, to fix the drift in private insurance so the Government does not get bled, and to help reduce hospital queues. The last is important. Despite the election result and the polls showing Medicare as one of the reasons for it, Richardson knows that the Government is politically vulnerable on hospital queues, aside from the sheer humanity of the issue _ people should not be kept waiting in pain.
He also knows that there is more to queues than insurance and bed availability: specialist availability (especially in the bush), for example, is also an issue.
The Richardson strategy is of necessity a slow one. He does not want to get knee-capped by his party. He has thrown out a challenge to his party and to the doctors.
It has to be done by negotiation and give-and-take. The Government cannot set doctors’ fees because it has no constitutional power. The doctors have made it clear that, though they will not tolerate back-door Government fee-setting, a growing number will voluntarily abide by a reasonable schedule if there is independent and regular arbitration of it and if their patients are permitted by law to insure to that level. Precisely how that is achieved will take at least six months to work out. That is why Richardson carefully told John Laws that he was not looking at this Budget, but the one after it. It is now over to Labor MPs and the doctors, but do not expect the aggro of old.