Ideas@TheCentre
The discussion we have to have
Health reform has dropped off the agenda even though the Gillard government's reform package is currently before the Senate. This is disappointing because the reforms will not solve the biggest problem in the system- long waits for hospital treatment.
Having the Commonwealth take back one-third of GST revenue and provide 60% of hospital funding won't make much difference when state health bureaucrats will remain in charge of capping public hospital budgets and rationing care.
If health reform is to amount to more than money shifting and rearranging the administrative deckchairs, we need to address the root of the problem- Medicare itself.
It isn't only the promise of 'free' hospital treatment without paying for insurance that makes Medicare superficially attractive to the Australian people. What seals public support for the scheme is 'free' bulk-billed GP visits on-demand.
We can trace the rot in the system to start of bulk-billing. Having lumbered the federal budget with the high cost Medical Benefits Scheme (MBS), the Commonwealth was determined to limit its financial exposure to the public hospital system. Instead of funding half the annual operating cost of public hospitals (as the profligate Whitlam government agreed to do under the original Medibank deal in the mid-1970s), the states were forced to make do with fixed health grants.
This was bad news for public hospital patients and staff. The loss of the Commonwealth cost-sharing arrangement imposed heavy financial burdens on state governments with small sources of revenue and big, competing service delivery responsibilities. As private health insurance coverage collapsed, and demand for 'free' public treatment increased, the states' predictable response was to control expenditure by dramatically cutting the number of beds.
This is the reason Medicare provides 'reverse insurance.' The minor health needs and expenses of the entire population are excessively subsidised by MBS at a cost of more than $15 billion a year.
Meanwhile, the minority of sickest patients wait in the public hospital queues for a free elective or emergency bed. A system meant to be about equity delivers gross inequities in access to care.
For those interested in genuine health reform, there is no escaping the need to address these issues. Medicare is structurally flawed, misallocates scare health resources, and leaves people under-insured against serious illness. The challenge is to design a set of reforms that will put in place a soundly constructed insurance system that fully subsidises the high cost of exceptional health problems.
Jeremy Sammut is a research fellow at The Centre for Independent Studies.
