My dear Arjay. I agree with much of what you had to say except the part about alternate medicine. To suggest such a thing makes me think you must be very well off indeed. Unlike traditional medicines, alternative medicines are not listed on the PBS and as such are extremely expensive. Unfortunately, the AMA will make sure that situation doesn't change in a hurry. Wildcat.

The medicare levy should be either abolished or adjusted to reflect the true cost of public health.

Currently the medicare levy is set at 1.5%. I would propose that it should be increased to 8% and marginal tax rates reduced by 6.5% to keep the change revenue neutral. Then at least the electorate would have a proper appreciation of what the public health service is costing them each year.

If this is deemed too complex then we should just abolish the medicare levy and increase marginal tax rates by 1.5%. Then at least the current deception could be layed to rest.

Well said Terje.

Of course one of the problems with private health insurers is they can chose who they provide cover to so people with pre existing conditions have no cover. This means:

the family of a high income lawyer has no cover because wife has a type of eplepsy that caused her to nod off in boring meetings

a lecturer invited to teach and research at an ivy league university, was unable to take up the position because his son was in and out of the childrens hospital for first 7 years of his life. The son is now normal.

Terje wrote "Make anything free and your supply system will collapse from too much demand.People will use it not out of need or necessity,but because they can.Try it.Make hot dogs free at you school canteen.People will gorge themselves until they're ill..."

Evidently he gets his ideas on the economics of demand and supply from watching children under 7 at birthday parties, or young males under 25 bingeing beer.

Most people in most circumstances do not behave like this at all.

If we are going to analyse this with late 19th century economics, we might at least respect the concept of diminishing marginal utility: apart from an initial small number (which in the case of chopsticks is two) each additional unit of consumption is less valuable than the previous one.

In the case for example of consuming general practitioner medical services (which since introduction of Medicare and despite depredations of the Howard government is still free for many), at some point for most people the marginal utility actually becomes negative. A health niggle becomes too small to be worth the bother of setting up and attending an appointment and worth less than the opportunity cost of spending the time some other way.

Earlier in this thread Winston Smith put forward the same silly idea as Terje. Am I supposed to believe that if Terje or Winston buys a slab of beer or a bottle of spirits that, given once the purchase is made the cost is a sunk cost and the marginal cost of consumption is nil, that they will immediately scoff the lot? I don't think so.

Why don't these people simply use their brains instead of parrotting - incorrectly - the thoughts of long-dead economists?

In a recent paper for the Productivity Commission, a Federal Government advisory body, Andrew Podger reviewed Australia's health care system. From http://www.newmatilda.com/policytoolkit/policydetail.asp?PolicyID=273&CategoryID=7 (with a link to his full paper):

"Based on his analysis, Podger identifies four key structural problems in Australia's health system: lack of patient oriented care; allocative efficiency; poor use of information technology; and poor use of competition...

"Podger favours a full Commonwealth takeover of the financial responsibility of the health system...

"First, there is a need to strengthen general practice and improve its links to allied healthcare, so as to improve care planning for the chronically ill and frail aged and play a larger role in prevention through assessments and advice for those most at risk. Strengthening primary care for Indigenous communities is also essential. Secondly, electronic health records and other IT support should continue to be a priority... Thirdly, there should be small steps made towards 'single funder, funding-follows patient approaches' for the frail aged. This would make it easier for a consistent, patient oriented approach to be provided... Fourthly, further and targeted investments should be made into preventive health in areas such as smoking, obesity, nutrition and physical activity. Finally, additional energy should be directed to improving competition in acute acre and clarifying a sustainable role for private health insurance...

"The incremental changes that Podger proposes are intended to provide clearer direction to health reform and would also support serious consideration of a Commonwealth takeover in the not-too-distant future."

Notice that simplistic cures like tipping more money or more doctors into the current mess don't receive highlighting.

MikeM claims that the theory of marginal utility shows my "parrotting" of ideas is “silly”. Perhaps he needs to revisit the premises on which marginal utility is based.

Human wants and desires are essentially unlimited. That does not mean that they are unlimited in the sense of wanting a limitless supply of a single good, but rather in the sense of scope. Of course an individual may feel that another trip to the GP is not worth the bother, but that doesn’t stop that individual from seeking other, perhaps more expensive, forms of health care and treatment.

The demand is limitless, which is why it must be moderated by some method. I would advocate a free market as the best way of carrying this out.

Regardless of which economic theory you follow, the point surely is whether it is legitimate to require, without consent, those with means, to fund the health care of those without. I don’t think it is, for reasons provided in other posts.