Posted by http://www.choice.com.au/SBL.asp?SBLID=365ArticleID=626 on September 11, 1998 at 22:37:59:
Making sense of GST and tax reform
How might the health care system be affected by tax
reform proposals?
Here the Australian Consumers Association looks at the healthcare implications of the main parties'
proposals.
The Coalition
The Coalition has allocated more than $5 billion over the next 4 years to
fund a 30% rebate for people who have private health insurance.
The Consumers' Association rejects the 30% rebate as a massive subsidy
that funds the top end of town at the expense of public hospitals and those
on lower incomes. The Coalition is responding as though private health
insurance funds 90% of our healthcare rather than the 10% it actually does.
And if the rebate comes into being following the election, the 70% of
Australians who rely solely on Medicare should be fearful of what it signals
-- a future threat to the universal Medicare system.
When the budget surplus disappears and sectors of the community have
become reliant on private health subsidies the Consumers' Association
believes public health services will be cut to cap funding. The universal
Medicare system will then be under threat and become a "safety net" only
for those unable to afford private care.
The Coalition has a responsibility to define what is the 'Medicare' it plans to
retain -- if it is simply a welfare service then consumers will be the big
losers and private institutions the winners. We need look no further than the
US to see the failure of a "welfare system" to deliver in both economic and
equity terms.
Will it take the pressure off public hospitals?
Many of the key stakeholders in the private health industry assert the 30%
rebate will release pressure on the public hospital system. This assertion
sits in stark contrast to the facts:
In the first year the Coalition government has allocated $1.02 billion
rising to $1.36 billion by the year 2001/02 for the new subsidy --
enough for most of the existing members, but not for new members.
Waiting times for surgery in public hospitals are related at least in
part to shortages in medical specialists as well as budget restraints
on public hospital expenditure - the rebates will not lead to more
medical specialists working in our public hospitals and takes
government funds away from directly providing public health
services.
Who benefits?
Not only would the benefits be absorbed almost entirely by people who
already have private health insurance they would go predominantly to those
on higher incomes who represent the majority of people who have private
cover.
The last survey of private health insurance membership by income was
done in 1995. The drop-out since this time is likely to have had an effect
which increases the representation of higher income groups in private cover
as they would have been able to absorb rising premiums over this time.
Based on the 1995 figures, 57% of the rebate for hospital cover and 60% for
ancillary cover will go to those earning over $40,000 a year.
The private health industry is also a major beneficiary of the Coalition
rescue package with a guarantee by the Coalition government to keep
member premiums down with no strings attached.
No strings attached
The rebate comes with no strings attached -- it doesn't force the industry to
address out-of-pocket costs for medical care faced by privately insured
patients when they use their private health insurance (Link to "What it
costs you to go private", page 10, CHOICE November 1997) or address the
factors that are driving up premium costs. In fact it could have the reverse
effect. Having provided the golden egg to entice people to stay in private
cover what incentive is there for the hospitals, doctors and funds to work
together to provide sustainable industry-led reforms?
The last round of private health insurance incentives were largely wiped out
by premium rises and there is little reason to believe the government's
proposed funding of the 30% rebate won't also have to increase significantly
over the next few years to cope with ongoing premium rises.
One Nation
One Nation's policy to means-test Medicare is even more alarming than
massive subsidies to private health insurance and sits in stark contrast to
their commitment to "Aussie battlers".
It's health policy has all the hallmarks of the system that now exists in the
US -- a two-tiered system where the well off get excellent, yet expensive
care in the private sector, the poor a second rate public health system and
40 million Americans fall through the crack between the two systems,
unable to afford private care, but not eligible for public health services. And
all this for around the same cost to the US government (as a percentage of
GDP) as it costs Australia's government to provide a universal health
system for all Australians.
The Australian Labor Party
The Australian Labor Party has chosen to commit additional funding to the
public health system through the introduction of a higher Medicare levy
(0.2% increase) on those earning over $50,000 rather then providing
additional public funds to prop up private health insurance. The Consumers'
Association supports additional funding being directed to the public health
system rather than to the private health insurance system.
The extra funding amounts to $500 million a year. However the ALP have
still retained the Medicare surcharge for high income earners who don't
have private health insurance. Neither major party has had the courage to
put pressure on the private health industry to pursue much needed reform.
The Australian Democrats
The central focus of a discussion paper released for comment by the
Australian Democrats is the retention and strengthening of the Medicare
system as well as sustainable industry-led reform in the private health
sector.
The extensive research conducted and contained in their discussion
document, A Search for a Cure, finds Australia's current health system
compares well by international standards and that Medicare still provides
the best mechanism for acheiving equitable and affordable access to
healthcare for all Australians. The document contributes sensible policy to
a muddied debate.
Medicare must remain for all Australians
The Consumers' Association does not buy the arguments to support
policies that advocate people being compensated for taking out private
cover and "not using public hospitals" or for the rich to be excluded from
using public health services.
Private health insurance is not a replacement for Medicare, but provides
additional services, such as dental care and physiotherapy not currently
provided by Medicare as well as other luxuries such as choice of hospital
admission date, choice of doctor, better food, a nicer room, a telephone
and television for example. People should have the right to choose to pay
more for these extra services, but not at the expense of public health
services which still provide the majority of healthcare.
All Australians benefit from Medicare, whether they have private cover or
not. GP and specialist visits out of hospital are funded by Medicare as well
as specialist services in hospitals, including private hospitals where private
specialists receive a set amount from Medicare for the private patients they
treat. And if you're in an accident you're liable to end up in a public hospital
emergency department where you can go in as a public patient and get
exactly the same care as you'd get as a private patient.
Nor should the well-off be excluded from using our public health system.
We all pay towards its upkeep and should be entitled to receive some of its
benefit. Excluding the well-off from public hospitals will deny them the
services public hospitals excel in providing, such as operations on the
circulatory and respiratory systems and trials of new drugs which often
occur in our large public teaching hospitals. And if the rich have no stake in
the public health system it will be funded as a second-rate welfare system.
We currently benefit greatly as a country from our universal Medicare
system with cost control from Medicare's large buying power, quality of
care and good health outcomes by world standards. It will be a high price
to pay for all Australians if Medicare is unwound.