The Guardian has published an interesting article arguing that Australia’s private health insurance system is broken and should be scrapped in its current form and replaced by a single health insurer:
This drastic assessment has been prompted by numerous reports from government, consumer groups and peak health bodies over the past six months.
All found private health insurance is increasingly unaffordable owing to rising premiums, prompting people to drop their level of cover to policies that are virtually useless for their healthcare but allow the customer to avoid government surcharges.
Consumers Health Forum, for example, describes the way many insurance packages lack adequate coverage for even basic needs, “and yet consumers continue to pay high and rising premiums on these policies with misplaced confidence that they will be covered”…
“Evidence has mounted in recent years that private health insurance has failed to deliver on one of its fundamental goals: taking pressure off the public system to preserve the fundamentals of universal access.”
It is an expensive public policy failure – the government spends between $7bn and $9bn a year to subsidise the private industry, depending on what calculation is used…
Doggett says governments should stop focusing on propping up the current system and instead look at establishing a single insurer. “If you look at evidence worldwide the overwhelming benefits come down on the benefits of having a single insurer,” Doggett says.
A health policy analyst, Ian McAuley, believes that the government will be forced to move towards a single insurer within the next decade, which would most likely be an expanded and better funded version of Medicare that would cover dental and all medical treatments and surgeries.
“In theory you could have a heavily regulated single private health insurer, but more likely it would be an expansion of Medicare,” McAuley says…
McAuley admits abolishing private health insurance would be too big an ask of the current government. But he believes there will come a point when costs become so exorbitant and private health insurance so worthless that the government’s hand is forced…
Countries including Finland, Iceland, Norway, Canada, Spain and Sweden have a form of single insurance where the state, rather than private insurers, pays for all healthcare costs.
This is a debate that Australia desperately needs to have.
Every year, the Australian Competition and Consumer Commission (ACCC) releases its report to the Australian Senate on competition and consumer issues in the private health insurance industry. And every year, the ACCC finds that Australia’s private health insurance industry is characterised by market failures due to asymmetric and imperfect information, as well as significant complexity.
Since 1999 a raft of government initiatives – essentially financial carrots and sticks – have forced Australians into purchasing private health insurance.
And yet successive governments – both Coalition and Labor – have failed to articulate why Australians need a duplicate health care system, or why the federal Government subsidies to private health insurance should be so substantial.
It’s not as if private health insurance buys patients extra quality and safety. The Productivity Commission (PC) found that the larger, most comparable public and private hospitals had similar adjusted premature death ratios. Further, the PC found that the team-based care in large public hospitals also leads itself to better coordination of care.
In fact, in Australia’s case, private health insurance is likely raising overall health costs. This is because the high financial overhead of private insurance means that only 84 cents in every dollar collected by private insurers is returned as benefits, with the rest going to administrative costs and corporate profits. By contrast Medicare returns 94 cents in the dollar, even after the cost of tax collection is taken into account.
A single national insurer, like Medicare, also has the monopsony buying power to control prices demanded by powerful service providers.
The 2015-16 Budget Papers showed that the cost of the private health insurance rebate will rise from $6,228 billion in 2013-14 to $7,061 billion by 2019-20 – an increase of 13%.
Where is the evidence to show that spending taxpayer money in this way is superior to expanding funding to the public system?
