Private Insurance A Public Liability
The Age
Thursday October 4, 2001
IS THE Howard Government ``businesslike" or ``for business"? Being businesslike means getting the biggest bang for the buck. Being for business means maximising the amount of taxpayers' money which can be siphoned off to supporters in the process of meeting program commitments.
One of the biggest taxpayer rip-offs is private health insurance.
Medibank (set up by the Whitlam government) and its successor Medicare (set up by the Hawke government) were highly popular with Australians.
Malcolm Fraser in 1975 and John Howard in 1996 both promised to maintain the universal system of health insurance and both systematically went about undermining it after their election victories.
The dismantling of Medicare (like the destruction of public education) requires the separation of the articulate middle class from the service itself, by running down the publicly provided service and providing incentives to buy the private alternative.
The public hospital system has been allowed to run down by the Howard Government, a 30per cent subsidy has been introduced for private health insurers, and to further underline the fact that households who stay with Medicare are behaving irresponsibly, contributions are age-rated and a 1 per cent income tax surcharge is levied on high income earners who refuse to buy private insurance.
The 30 per cent subsidy costs the Commonwealth's coffers about $2.5billion, and the exemption from the 1 per cent levy surcharge costs an additional $750million.
And what do we get for that? The government claims it takes the pressure off the public hospitals. This is a lie. Doctors follow the money trail. If there are fewer patients seeking public hospital treatment because they have private health insurance and because they want to avoid long waiting periods for elective surgery, doctors will shift from operating on public patients to operating on private patients.
This is a policy well suited to the interests of surgeons, the owners of private hospitals, and the pharmaceutical industry, which finds it irksome to be constantly dealing with public health officials concerned to keep costs down.
The policy is also attractive to the rich and selfish who find it offensive that health service priorities are ordered according to need rather than ability to pay.
The American system is the pot of gold at the end of the Howard Government's health policy rainbow. The US consumes about 15 per cent of its gross domestic product in the provision of health services and has worse outcomes in terms of infant mortality, morbidity and longevity than countries such as Australia and Canada, which spend only about 8.5 per cent of their GDP on health.
New figures from the Australian Institute of Health and Welfare show that the government's policy has allowed a build-up in private health fund surpluses and rising administration costs.
Between 1988 and 2000, private fund administration costs rose from 11.5 per cent to 14per cent of total private fund expenses. By comparison, Medicare spends 3.5 per cent on administration.
Undermining Medicare has helped the annual cost of administering private health insurance to rise from $500 million in 1998 to about $900 million now. If the people driven out of Medicare had stayed, the net saving on administration cost would be about $300million a year - enough to finance an extra 10,000 elective surgery operations or an extra 750,000 bed days in acute hospitals.
Why subsidise private health insurance overheads? It is a burden to taxpayers, it is stampeding 20 per cent of the population into buying private health insurance that they don't want, and it props up an uncompetitive industry that has shown it can't compete on a level playing field with Medicare.
Surely if we had $300 million to waste on industry assistance, it would be better if the money was given to Ansett - at least it would keep a few planes in the air and keep far more people gainfully employed than the smaller number employed in private health insurance.
Those people, no matter how hard they work, are wastefully employed.
Kenneth Davidson is a staff columnist.E-mail: dissent@iaa.com.au
© 2001 The Age