Individual health savings accounts make little sense to me. The whole purpose of insurance and public health care is dealing with the fact that medical costs are concentrated amongst the few unfortunate people who suffer serious ailment. Compounding this problem is the fact that those most needing expensive medical care will be unable to work and thus become the least able to afford it. Because of the relative unpredictable nature of these ailments its serves in both society's and the individual's interest to agree spread the costs around. You're comparison with superannuation fails to take into account the difference between the steady stream of funding required for retirement compared to the sharp spikes required for medical care.

Applying marginal costs to minor health services (GP, Dental, etc) does not make much sense to me either. It discourages people from seeking preventative health care and early detection which are multitudes more efficient that dealing with a problem further in it's development. So while you save up front by making people more 'economically responsible', you end up costing more in the long run because they've become less 'health responsible'. It's better to have 10 healthy people see a doctor than have 1 unhealthy person not, who then gets sicker and costs the system 50 times as much.

This proposal has some strong advantages over the current system. First, it opens up a way of funding consumers (patients) rather than providers and governments. Because our health system it totally provider-centred and provider-dominated, establishing ways of funding the consumer is critical to reform. Without it we can't have anything like a market in health care. Funding the consumer is the only effective way out of the commonwealth/state funding impasse.

Second,it is relatively simple to commence, and that makes it a useful tool in the complex business of initiative health care reform.

That said, I think it is easier politically to commence this kind of approach in more specific fields of care, such as chronic illness, disability and aged care. The National Federation of Parents, Families and Carers has proposed the establishment of an Office of Family Accounts in the Department of Prime Minister and Cabinet to hold and allocate public funding in disability and aged care on behalf of families caring with a person in these situations. General funding would be allocated directly into these accounts - instead of paid into the coffers of providers (the middle men) where there is huge waste and inefficiency.

Politically, it is probably best to have created the accounts first through an prior initiative like this one, then begin shifting resources that might otherwise be earmarked as tax cuts. Shifting resources from the providers to the consumers will be a process that will be resisted strongly by the provider interests (doctors, hospitals, state governments).

Vern Hughes
vern@civilsociety.org.au