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The Forum > Article Comments > Putting a healthy surplus before personal well-being > Comments

Putting a healthy surplus before personal well-being : Comments

By Tristan Ewins, published 14/1/2014

Terry Barnes, a former former senior advisor to Prime Minister Tony Abbott, has suggested a $6 dollar surcharge on bulk-billing via Medicare in order 'to send a price signal'.

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Were it up to me I would go back to the not-for-profit stance re: Medibank Private. That was the original rationale behind Medibank Private after all.

But I think were we to re-establish government business enterprises elsewhere would have to balance the two imperatives - enhanced competition and dividends directed towards progressive social purposes. (for instance if a public savings bank was re-established - many billions would likely be at stake every year)

I also reaffirm that I don't believe in a 'two tier health system'. That's always been the strongest argument against the rebate. But for those low income citizens who have a reason of their own for choosing private health insurance I believe they deserve a subsidy - if there is to be any subsidy at all. Though my policy would be to 'build up' public health to the point where many would eventually not see the point in private health insurance.

Yet Conservatives have long argued that increased private coverage is desirable. I'm not beyond pointing to their own arguments to overcome objections to increased private health insurance subsidies for the disadvantaged - during the interim period.
Posted by Tristan Ewins, Wednesday, 15 January 2014 1:19:23 PM
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Tristan,

The medicare rebate was put in place to encourage people to take out private health insurance to encourage the use of private facilities and to take the pressure of public hospitals. This was extremely successful.

The proof of the pudding is that the means testing of this rebate has lead to a huge drop in private health cover, with the result is that the costs to the public hospitals have risen more than the "savings" gained by lessening the rebate.

The $3bn from removing the rebate would most likely add even more to the cost of public hospitals.
Posted by Shadow Minister, Wednesday, 15 January 2014 2:21:32 PM
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Shadow Minister:

Firstly to begin with we can re-impose the means test rather than utterly abolish the rebate. People on middle to upper incomes can afford private health insurance without a subsidy.

Thereafter if additional subsidies go to low income individuals and families - then that would be more likely to win new consumers over who could not afford it otherwise.

Finally: While the Private Health Insurance Rebate can conceivably lift pressure from public hospitals - it is on the basis of a two tiered system. Otherwise for many people there is no incentive... So the system we have now is about providing an incentive for private health insurance by providing a 'second tier' public health system.

So yes - investing resources in more hospital beds and more specialists would cost the budget bottom line. But in the final analysis there is no providing all Australians for medical care they NEED without a greater investment of resources. The same principle applies in Education... A two-tiered system offends against Australian egalitarianism.

Though there are some people who have had bad experiences with the public system - who are on lower incomes - and in the interim period (before public health deficiencies are fixed)- may want to take out private health insurance. These people deserve that choice.
Posted by Tristan Ewins, Wednesday, 15 January 2014 2:57:42 PM
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Not necessarily the best plan any longer, Tristan Ewins.

>>Were it up to me I would go back to the not-for-profit stance re: Medibank Private.<<

This is, as we have noted before, an insurance business. What separates private health from other insurances is the relative ease with which the insurer itself can influence the level of claims against it. And hence, give them the ability to keep premiums under control.

Think of it this way. If you are insuring cars, you are heavily reliant on the legal system (speed limits, penalty-point systems etc.) to lower the overall risk of having to pay out. If you insure home-and-contents, you rely upon a level of policing and law enforcement to keep burglary statistics down. But with health, you are unilaterally able to institute programmes that actually lower the number of claims.

Disease management is becoming an important contributor to this initiative, as are "wellness" and "lifestyle" programmes.

http://www.digitaljournal.com/pr/1681608

But wait - these programmes require investment. And the money to implement them can come from two sources, the health insurer, or the government. Both, of course, are strongly motivated to reduce the cost of the health system. But quite frankly, I wouldn't trust a government department to do any more than spend years in pointless committees, determining the size and colour of the brochure.

With broader shareholder funding (or perhaps the deeper pockets of an overseas investor), Medibank could lead the way in this area. Investing in the future, it is called, and shareholders are far more likely than the government to soft-pedal the dividend for a few years while the necessary reorganizations and re-purposing of the business takes place, for the prospect of lower costs/higher profit margins in the future.

Premium costs are also kept down through competition. Having one organization commanding such a substantial marketshare AND being beholden only (and only indirectly, as the sole shareholder) to the government of the day, is not a healthy business environment.
Posted by Pericles, Wednesday, 15 January 2014 3:01:00 PM
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Whoa there Tristan Ewins. We're going backwards...

>>Firstly to begin with we can re-impose the means test rather than utterly abolish the rebate.<<

I thought we had agreed that the means-testing is still in place, and doesn't require to be re-imposed? You can't just ignore facts like that while answering someone else's post, and think you can get away with it.

What you should have said in response to Shadow Minister's assertion...

>>... means testing of this rebate has lead to a huge drop in private health cover,<<

... is simply "rubbish". There has not been a drop in the number of Australians covered by private health insurance...

http://phiac.gov.au/wp-content/uploads/2013/11/QtrStats-Sep13.pdf

The numbers are still increasing, in fact.

But while I'm here I will take issue with this statement of oyurs:

>>I also reaffirm that I don't believe in a 'two tier health system'<<

Our system is not "two tier", since all services are available to all citizens. We have a hybrid system of a safety-net public health system (which is still one of the very best in the world) and a "user-pays" system of community risk-rated insurance allowing access to the private system.

>>Though my policy would be to 'build up' public health to the point where many would eventually not see the point in private health insurance.<<

Many have tried. All have failed. The reality is that any free system will suffer from wasteful use. If you then try to police it for over-servicing, you bring down the entire "free at the point of usage" edifice through costs spiralling out of control.

Health is one of the most critical political issues facing every country in the world. No-one has it "right", but the lessons being learned are extremely consistent: you will always have to have i) a system of self-insurance, and ii) a system of limiting access to the "free" components.
Posted by Pericles, Wednesday, 15 January 2014 3:17:10 PM
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The comment about "a huge drop in private health cover" was Shadow Minister's; not mine.

But yes I did revert to my older assertion re: means testing.

A honest mistake.

But you can be certain it's still on Abbott's 'radar'; whenever it becomes practicable to implement.
Posted by Tristan Ewins, Wednesday, 15 January 2014 3:55:09 PM
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