Despite the success of Medicare, there are increasing signs of pressures in our health system, especially in public hospitals. Major changes are occurring to meet these pressures and more may be planned, but with little public debate about our overall approach to health care.

Objectives for the future

Expert health policy analysts tend to agree that there is no one best way to fund and organise a health system. The most important step is to decide and prioritise the desired objectives - access, equity, efficiency, choice, public satisfaction or cost control. Only when these objectives are agreed can we work out how best to improve what we have and get there as efficiently as possible.

The evidence suggests that the recent introduction of extensive subsidies for private health insurance is likely to reduce equity and cost control while increasing choice for some people. Yet Australians say they support the underlying principles of Medicare - universality, access, equity, efficiency and simplicity. If that is the case what should Australia be doing to ensure our high quality health system is made even more fair, more efficient and better able to deliver good health?

Will increasing private insurance help?

Probably not! Over-stretched emergency services in public hospitals are key stress points. Virtually everyone, with or without private health insurance, relies on public hospitals for these services.

Difficulties with elective surgery waiting times must be addressed. The amount of completed elective surgery depends on the number of doctors available in each specialty.

If more people choose to be treated at a higher priority level in private hospitals, the finite number of specialist doctors will have less time to treat patients in public hospitals. As the level of private health insurance increases, less funds will be available in the public system.

What about means testing access to public hospitals?

Some state premiers have suggested that means tests should be introduced to limit access to public hospitals.

This would represent double payments. Means testing already applies through income tax and the Medicare Levy. Those who wish to introduce means testing at the point of service forget that a means test has already been applied to the insurance they pay through Medicare. Alternatively they are so keen to strengthen private health insurance that they want to make it harder for people to use the public system for which they have already paid.

Means testing at the point of service catches people when they are most vulnerable. It is administratively expensive and clumsy. It is an extra impost designed to promote private health care.

Fine tuning or big bang?

Do we need major changes or simply targeted approaches to deal with concerns?

Overseas evidence suggests that Australia’s health system is generally performing well. Major changes are likely to lead to unforeseen problems and may not fix current concerns. Well-targeted reforms that build on the strengths and principles of Medicare are the best way forward.

Examples of these reforms include:

• reducing waiting lists for elective surgery in public hospitals

• tackling the causes of pressures on emergency services;

• finding ways to target money more effectively to need and to reduce waste and inappropriate service provision and demand;

• redirect funds or use additional funds to finance services where unmet need is substantial (for example for services to indigenous people, in rural and remote areas, dental health, mental health);

• finding more efficient ways to use the health workforce;

• rationalising the roles of the various levels of governments and of the public and private sectors; and

• adopting a more strategic approach to improving population health, including attention to action outside the health system which could reduce the burden of preventable diseases.

Increase Medicare levy by 1%

Implementing the above changes would require extra funding for the public system. Increasing the Medicare Levy by one per cent and quarantining these funds for public hospitals would go a long way to solving the immediate problems in public hospitals. There is every reason to believe that the community would overwhelmingly support this. Provided they can be sure that the money goes to health, the Medicare Levy is the one tax that people are happy to pay.

Increasing public awareness and debate

None of this will be easy. It will require solid understanding and support of the community as a whole. This means a much more serious approach to involving the community in the debate about what we want from our health services and how best to ensure that health dollars are used to best effect.

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