Medicare is 30 years old and is the scheme that publicly funds Australia’s universal health care system. Medicare has always generated political conflict. From 1972 to 1984 Australia became the first developed country to introduce a universal health care system (under Gough Whitlam), then discard it (under Malcolm Fraser).
In those 12 years Australia tried, on five separate occasions, to balance public and private insurance schemes. Finally, in 1984, the Bob Hawke government reintroduced a universal health care system, Medicare.
The introduction of Medicare was strongly contested and opposed by the Coalition from 1983. It was only after the Coalition’s fifth successive defeat in the 1993 federal election that John Howard committed the Coalition to retaining Medicare — he accepted the reality that the Australian public valued Medicare and wanted it retained.
ISN'T THE GROWTH IN PUBLIC SPENDING ON HEALTH MAKING MEDICARE UNAFFORDABLE?
The short answer is no. This is a myth that has been perpetuated by political ideology rather than facts.
The reality is that in the coming decades, spending on health care will grow but incomes will also grow. Households will decide for themselves how to spend that real income growth on maintaining health.
Increased spending can be done as individuals in a user-pays system, or it can be done as a community in the form of a system of universal insurance such as Medicare.
The difference is, in a highly privatised user-pays system, like the US, there will be winners and there will be losers. Excellent care is available to those who can afford it (or insure against it), but those who cannot afford it suffer terribly as a result.
Never forget also that the highly privatised US healthcare system costs far more and delivers far less than systems based on universal insurance.
The rest of the developed world economies have chosen to rely on universal insurance because it costs less, is more civilised and equitable, and results in better outcomes. The notion that dismantling universalism, privatisation and shifting costs to individuals is the answer to making the system more sustainable is a recipe for higher costs overall and rising social inequity.
WE HAVE AN AGEING POPULATION. DON'T WE NEED TO PRIVATISE MORE OF MEDICARE SO WE DON'T BANKRUPT THE GOVERNMENT?
The overwhelming evidence is that the ageing of the population will not have a major impact on the sustainability of Medicare. Evidence shows that the impact of ageing on this growth in costs is small or potentially insignificant. Most of the growth in costs in health can be attributed to developments in technology and changes to practice.
That is not to say that the health system should disregard the implications of the ageing of the population. There will be a rise in the burden of chronic diseases. It will be increasingly important that people with chronic diseases avoid expensive hospitalisations through easy access to early intervention, prevention and education about self-management in the most cost-effective settings.
But it does not demand a winding back of the universality of Medicare or increased private funding.
WON'T PRIVATISATION AND COMPETITION LEAD TO GREATER EFFICIENCY?
Health is not the same as buying cars or CDs and cannot be treated the same as other goods and services on the market. Basically, market forces don’t deliver efficiency in health.
We need to look no further than the US, the health system most heavily exposed to market forces and the least efficient. Among advanced economies, the US spends the most on health care on a relative cost basis with the worst outcomes.
The scale and unpredictability of health costs means that insurance, be it public or private, is inevitably a major feature of the industry. Individuals who are insured have an incentive to maximise the return they receive from their purchase of insurance.
Doctors also have an incentive to over-service and overcharge when they know their patients are covered by insurance.
Economists call this moral hazard. Moral hazard is associated with any insurance market but has particular implications for the health care market. However, when that insurance is universal there are far greater opportunities to manage such issues.
WHY SHOULDN'T WEALTHY PEOPLE BUY BETTER HEALTH CARE IF THEY CAN AFFORD IT?
Australians who can afford to pay for health have many opportunities to pay for increased access to health care in the private sector.
If the government were genuine about this issue, it would be committed to maintaining means testing of private health insurance rebates or scrap them altogether.
The reality is that Prime Minister Tony Abbott believes that the private health insurance rebate is an “article of faith for the Coalition”.
We reject the argument that Medicare should be reduced to a safety net for the poor. This would inevitably lead to a two-tier system with substandard services for the poor.
Calls to improve “safety net” services would be easy to ignore because the people who would rely on it, that is the lower social economic groups, are not politically influential.
An underfunded safety net would escalate demand for private care and drive up costs. Beneficiaries would be the very wealthy and the private insurance industry. Average Australians would have a lot to lose because they would be ineligible for the safety net and have to deal with inflated direct costs of care and/or insurance premiums.
WE ALREADY HAVE A MIXED PUBLIC/PRIVATE SYSTEM. WHAT IS THE BIG DEAL IF THE BALANCE SHIFTS A BIT FURTHER TOWARD PRIVATISATION?
Any moves towards privatising elements of healthcare currently covered by Medicare are a stealth strategy of incremental cuts to reform Medicare as a safety-net for the poor. Liberal leaders have adopted strategies of incremental cuts that will gradually erode the broader public’s confidence in, commitment to and support for Medicare and universal health.
Unless defeated, a tipping point will be reached and Medicare will be recast as merely a welfare program for the poor.
In a mixed public/private system, a strong, publicly funded health system plays an important role in containing the overall rate of inflation of health costs. Weakening Medicare while strengthening the private sector creates incentives that result in:
• Increased waiting times in the public sector as doctors have an economic incentive to serve private patients.
• Incentives to maintain long public waiting lists in order to increase the attractiveness of more lucrative private care. How will the private operators of the new Northern Beaches Hospital, which will provide both public and private beds, deal with the temptation to create circumstances that optimise the attractiveness of their more lucrative private beds?
• Ethical questions when entrepreneurial doctors refer patients to private care in which they have financial interests.
• Growth in input prices due to competition between the public and private sector.
In the public sector this leads to either a reduction in the provision of services or the need for public spending growth to maintain previous levels of service.
• Privatisation leads to poorer working conditions for the nursing and midwifery workforce.
CO-PAYMENTS
Health care is an expensive sector of the economy and it is crucial that appropriate reforms are sought and implemented in order to improve the efficiency and effectiveness of the system. Co-payments, particularly for GP visits and other primary care settings, will end up costing more to the individual.
The notion that co-payments for GP visits will discourage only unnecessary contact with health professionals is ludicrous. Most people attend GPs precisely because they don’t know if their symptoms are a sign of something more serious. Irritability and fever in a toddler may be associated with teething or it could be the early stages of a potentially catastrophic meningitis infection.
Data shows that out-of-pocket expenses in Australia are already high, and this is creating an unacceptable barrier to effective health care for some people. The evidence indicates that last year, 16% of Australian adults reported that they had experienced cost-related access problems (did not fill/skipped prescription, did not visit doctor with medical problem, and/or did not get recommended care) and Australians’ out-of-pocket expenses were second only to the United States. Imposition of a compulsory co-payment on general practice visits will exacerbate these concerns.
WHO LOSES OUT?
Australians most in need of health care are the ones least able to afford it and the evidence shows that co-payments impact disproportionately on vulnerable groups such as:
• Individuals with low income and in particular need of care reduce their use of health care relatively more than the remaining population.
• People with chronic illnesses. Australia is facing a major chronic disease burden in the future and it will become increasingly important to find more efficient ways of managing chronic illnesses. This will require more emphasis on primary health care and better integration of health care.
It will be increasingly important that people with chronic diseases avoid expensive hospitalisations through easy access to early intervention, prevention and education about self-management in the most cost-effective settings.
[Reprinted from the NSW Nurses & Midwives Association’s publication Keeping it public: our public health system is not for sale.]
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