Health ‘death spiral’ warning
AUSTRALIA’S health system is unfair and muddled and the prescription for its repair depends on the Federal Government’s approach to private health insurance.
In a paper on private cover, Grattan Institute analysts Stephen Duckett and Kristina Nemet warn the sector faces a death spiral if young, healthy people continue to drop their cover.
An “unhappy mix” of partially public and partially privatised health care in Australia has led to a system “riddled with inconsistencies and perverse incentives”, the paper, released yesterday, said.
A new framework is needed but the government must decide whether the purpose of the private system is to complement or substitute for the public one, before considering if further subsidies are the best solution to save the health insurance industry, it said.
Taxpayer subsidies total about $9 billion a year, including $6 billion for the private health insurance rebate and $3 billion for inpatient private medical services.
If private health was meant to be complementary – offering “add ons” or services not available under universal public health – then the argument for increasing public subsidies was weak.
More than half of all Australians have private health insurance that covers services not taken in by Medicare, including dental, optical and allied health services such as physiotherapy.
“If government is not prepared to provide those additional services universally, it is illogical to subsidise for a subset of the population through (insurance), especially when that subset is not the most disadvantaged in the community,” the Grattan paper argued.
IT IS ILLOGICAL TO SUBSIDISE FOR A SUBSET OF THE POPULATION … WHEN THAT SUBSET IS NOT THE MOST DISADVANTAGED GRATTAN INSTITUTE PAPER
However, if private insurance was to be a substitute for the public system, offering faster care to those who could afford it, then the argument for increasing subsidies was strong – as long as the private system could show it was costeffective.
“Ultimately, the final judgment about the value of subsidies for PHI will involve balancing the net benefit relative to the net costs, both to government and society, taking into account who pays, the role of government, and the value placed on the complementary role of private care,” Dr Duckett and Ms Nemet said.