Opinion & Commentary
Our Medicare Vice
Australians as a people have many virtues but one major ‘vice,’ for want of a better term.
We are an empirical people who tend to be interested only in what works and what doesn’t.
This means we are reluctant to think about problems in terms of abstract ideas and principles.
This is highly relevant to the state of Australia’s health services.
Long waiting times for public hospital treatment in this country are almost a daily source of popular dissatisfaction.
Yet few of us bother to think how this problem is related to the principles of the government program primarily responsible for financing the health care of the nation.
The reality is that the problems in hospitals stem from the problems with Medicare, which stem from the faulty principles behind the whole ‘reverse insurance’ Medicare scheme.
A soundly constructed insurance system does not insure people for all services no matter how minor the health need and cost; instead, it enables people to share exceptional risk involving major health problems and high cost medical procedures.
Medicare violates sound principles of insurance because the least costly, least serious health expenses are excessively subsidised through bulk billing and the Medical Benefits Scheme.
For the vast majority of citizens, except those with severe financial hardships or with complex conditions, no subsidy should be provided for occasional GP visits and tests that do not involve life and death decisions and high or ongoing costs.
People should insure themselves against the everyday vicissitudes of life by saving their income and paying out of their own pockets because when government subsidises the minor services consumed by millions of consumers, and when these services are made ‘free’ or low cost (thereby stimulating extra demand), the aggregate cost is very large.
The perverse outcome is that the high cost is offset by restricting funding to parts of the system that treat the very sick. Caps imposed on hospital funding inevitably blow out waiting times.
Politicians of all persuasions love to complain about the ‘disgraceful’ amount of time people have to spend in queues for hospital care. But they never hesitate to fully support the electorally popular bulk billing system, which distributes financial benefits to the hip pockets of the maximum number of voters.
Unless we all start to think through the problems with Medicare in principle, the ‘hospital crisis’ – and the Medicare ‘mess’ that causes it – will not be cleaned up anytime soon.
Dr Jeremy Sammut is a Research Fellow at the Centre for Independent Studies.
