Australia's Medicare and private plans
The private life of health care
By Ruth Pollard and Mark Metherell
The Sydney Morning Herald
April 6, 2007
In just 10 years, the health system many were dreading has arrived. Spurred by the Federal Government’s campaign to push Australians into private health insurance and exacerbated by difficulties in finding care in public hospitals, the balance has tipped in favour of private hospitals. Our system is now a genuinely two-tiered model: the wealthy and privately insured get timely health care and the rest, unless they are critically ill, can wait.
In the past decade, a clear division of labour has evolved: public hospitals are now dominant in emergency surgery and medicine, while private hospitals rule in elective surgery, accounting for 55.7 per cent of all operations.
“Since 1982-83, Australia’s hospital system has witnessed a massive shift of activity to the private sector,” Bill Nichol, an assistant director in the federal Department of Health, writes in the study.
“The private sector’s role has increased to dominant player” in several categories of care, including eye, cancer, ear, nose and throat and the male and female reproductive systems, Nichol says.
The worrying thing is that many seem to have thrown up their arms in despair, a kind of “Oh, well” about the death of equity in the health system.
Bruce Armstrong, the director of research at the Sydney Cancer Centre and a professor of public health at the University of Sydney, believes there has been no attempt to prevent a two-tier health system from developing.
“Equity is a real issue … a proportion of the Australian population which is not inconsequential is not going to get that care because if you go to a private hospital you need private health insurance and even then, there [are] always going to be gap payments.”
A disturbing trend to emerge despite the establishment of Medicare in 1983 is the widening disparity between the well-off and the poor in mortality rates from avoidable diseases. The Australian way of death means the prosperous are significantly less likely to die from avoidable disease than those on low incomes.
In 1986 the rate of death from “avoidable” causes such as treatable and preventable conditions like heart disease among the have-nots was 50 per cent higher than for the haves. By 2002 that difference had stretched to a twofold gap, according to research published in the International Journal of Epidemiology.
The report concludes that “advantaged people have obtained a disproportionate benefit of health care, contributing to widening relative health inequalities”.
“A universal health-care system does not guarantee equality in health-care-related outcomes,” says the article, whose lead author was Rosemary Korda of the National Centre for Epidemiology and Population Health at the Australian National University.
The Health Minister, Tony Abbott, having presided over multibillion-dollar infusions into the private sector through Medicare payments to private doctors and the private insurance rebate, acknowledges states are bearing a larger share of public hospital costs.
But he says that if there is an equity problem, it’s for state governments to fix. “It may sound like I am playing the blame game, but state governments are responsible for public hospitals,” Abbott says.
He would welcome further growth in private insurance, which he suggests many more people could afford given that more than 1 million people on incomes of less than $20,000 pay for cover.
“No doubt having private health insurance confers additional benefits [like avoiding public waiting lists], but you do have to pay for it,” Abbott says.
It was inevitable that we would end up at this point, says Professor Jeffrey Braithwaite, the director of the Centre for Clinical Governance Research at the University of NSW.
“This is a health system responding to policy measures - those measures are the caps in the public hospital system and the incentives provided in the private system,” he says.
“The real question is, is this the health system that we want, that people desire?”
Australian Health Review - Abstract (Nichol):
http://www.aushealthreview.com.au/publications/articles/issues/ahr_31_1_0407/ahr_31_1_s004.asp
International Journal of Epidemiology - Abstract (Korda et al):
http://ije.oxfordjournals.org/cgi/content/abstract/dyl282v1
Comment:
By Don McCanne, MD
Australia’s experiment with a public Medicare program and private insurance plans has provided a very important policy lesson for the United States: Establishing policies that encourage the purchase of private insurance while simultaneously limiting the funding of public insurance will inevitably result in a two-tiered system. More affluent individuals will have the best care money can buy, whereas those remaining in an underfunded public program will have impaired access and impaired health outcomes. Keep in mind that impaired health outcomes means chronic suffering and death.
The private Medicare Advantage insurance options in our Medicare program are intended to reproduce this same two-tiered system in the United States. Currently the Medicare Advantage plans are provided with more taxpayer funds so that they can attract individuals by providing better benefits. Once the private plans are well established, the government can start reducing the funding of both the traditional program and the private plans. But the private plans will be able to continue to offer greater benefits merely by increasing premiums and cost sharing. Thus more affluent individuals will select the private plans whereas individuals with more modest means will be relegated to the underfunded public program. Without a surge in political activism, this outcome is inevitable.
There is an even more important lesson from the Australian experience. We now have a consensus that we must reform health care in America. The two main options are to either establish an equitable national health insurance program, or build on the current fragmented system to achieve universality. Numerous attempts at patching our current system have fallen short, so some politicians and policymakers are now supporting a public Medicare-like program as a safety-net alternative. Because health care costs are a leading concern of virtually everyone, efforts will be made to keep the funding of the Medicare-like option to a minimum. Imagine a minimally funded program that attracts people with low incomes and with significant health care needs; talk about stretching resources. Anyone who can buy their way out of that program will. Like Australia, a two-tiered system would be inevitable.
As Professor Braithwaite says, “The real question is, is this the health system that we want, that people desire?”