Now to Medicare more generally.
In its early years, both Whitlam’s Medibank and Hawke’s Medicare were popular and successful. Private insurance coverage fell from 78 per cent in 1972 to 62% in 1975. It fell from 50 per cent in 1983 to 30 per cent in 1998.
It should have been the end of the inequitable, inefficient private-health system. But the Howard Government inserted four big props under it.
First was the threat of higher life-long premiums for people who do not take out private cover by the time they are 30.
Second was the surcharge for people on higher incomes unless they have private cover.
Third was tax deductibility of private premiums.
Fourth was the slow erosion of Medicare’s payments to specialists. It meant specialists fled the public system causing a blow-out in waiting times, thereby enticing people into private insurance so they could “jump the queue”.
The Albanese Government should remove the first three and fix the fourth. Or better, it should keep the surcharge for those on higher incomes but remove the exemption for those with private cover.
Propping up the private health system with public money has two problems. The first is that it is inefficient. Private insurers pay about 14 per cent of income on administration. Medicare spends about 3 per cent.
Secondly, it is unfair. Why should public money be poured in to the private system? If people want health services provided by the market, they should pay the market price.
The Howard props resulted in private coverage rising quickly to about 45 per cent and staying there.
Now would be a good time to start removing the props because one of them is already faltering – the flailing Medicare payments to specialists. This drove many people into private insurance, but there was a side-effect. Fewer specialists charged just the Medicare fee and more specialists kept ramping up the difference between the Medicare payment and what the patient was charged – the gap.
It means that the cost of jumping the queue is now much more than private-insurance premiums. The ever-increasing gap fee has to be added. For example, only 11 per cent of anaesthetists bulk-bill private patients.
This is resulting in more people questioning the value of private insurance, but they cling on because of the other props. Fear is a big motivator.
Without the props people would gradually flee the private system. Proponents of the private system argue that this would swamp the public system. Not so. Rather it would bring into the public system a lot of articulate, voting, middle-class people who would pressure the Government to improve it.
The more these people stay in the private system, the fewer people there are to care if public services deteriorate. It is the same with education.
People in private health might think they are being virtuously self-reliant. But their private system is being propped up with public money. Moreover, come the crunch, anyone with serious traumatic injury or serious chronic conditions uses the public system.
The tax rebate for private insurance costs the budget $7 billion a year. That is $100 billion since it was introduced. And there is no evidence that it takes any burden from the public system. Indeed, waiting lists in the public system have not improved since any of the Howard props were introduced. The aim of the props was an ideological attack on public medicine, not measures to improve overall health.
Of course, pressure on the health system will only increase now the Government has decided to increase immigration in the wake of the jobs summit. Interestingly only a third of people agree with the increase, according to a Resolve poll. That is roughly equivalent to the percentage of adults who are in the employer class – the people who profit from cheaper labour.
A third of people were opposed and a third apathetic. In short, almost all unbiased people who thought about it, were opposed to higher immigration. How long will government continue not to listen? Alas, this week’s article on solving housing stress by Federal Housing Minister Julie Collins is not encouraging. The article did not once mention higher population as a cause of housing stress.
This article first appeared in The Canberra Times and other Australian media on 27 September 2022.