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'Medicare Gold' and the golden age of health care

By David Flint - posted Wednesday, 27 October 2004

Apparently Mark Latham informed the first meeting of caucus since the election that Medicare Gold is to remain Labor policy. This was a mistake - the sooner Medicare Gold is forgotten the better. Medicare Gold should be contrasted with the golden age of medical care, the years before the Whitlam government socialised the system.

There were no waiting lists then, hospitals did not turf out patients before a proper convalescence and costs were closely monitored. Most people had insurance, the government looked after pensioners and doctors did a vast amount of pro bono work.

Contrast that with the situation today. Hospital waiting lists are lengthening, the NSW Government has just abandoned a complex and unnecessary system of hospital administration it had installed at great expense, while the community remains concerned about the unusual number of deaths in hospitals. A man was left bleeding outside Sydney Hospital - next door to Parliament - because doctors and nurses refused to help.


As with transport, water and electricity and other infrastructure, efficient management of the public hospitals seems to be beyond at least some of the state governments. No wonder the NSW Premier engages in such distractions as the Kyoto Protocol - a federal issue if ever there was one - or keeping the Governor out of Government House, changing Crown land into State land, and removing the politicians’ Oath of Allegiance. Now he is trying to hand the hospitals over to the Commonwealth. He no doubt would want to keep those golden rivers flowing from the GST which Mr Howard, at great political risk to himself, gave the ungrateful state governments.

Under Mr Latham’s retained policy, anyone over 75, even a multi-millionaire not in any urgent need, may jump the queue at a public hospital. (Queues of course are an inevitable feature of socialised medicine.) This recalls those earlier “reforms” of the 70’s to provide aged pensions and free university education without any regard to need. Neither lasted for long, but long enough to do damage. The universities have never fully recovered.

At the heart of Medicare is that sacred cow, bulk billing, which was always a flawed concept. Bulk billing requires that not only the taxpayer subsidise each consultation, but also the doctor accept a fee substantially lower than that charged by tradesmen and professionals. There is no limit to the number of consultations with each patient, even when these are clearly unnecessary. When doctors demonstrate their lack of interest in doing the politicians’ bidding, state governments compound the problem by allowing hospital casualty departments to be misused as a surrogate for bulk billing GP’s. It is difficult to think of a more foolish waste of resources than bulk billing, although providing competition in the pay television market by having parallel cables in suburban streets came close. (Why not also encourage competition between tramway companies by encouraging them to lay parallel tracks?)

What people need is not bulk billing, but insurance against calamities. They already do this with their houses and cars, where they usually choose to pay a lower premium in return for accepting responsibility for a reasonable excess, say the first $500.

Medicare’s flaws have been ameliorated by the introduction of the rebate to encourage people to go back to taking out health insurance. But even then, there was some muttering about the fact that a lower premium could be negotiated if the insured agrees to carry an annual excess, say $500. That this is precisely the inclination of a rational person disturbs those who think their ideological obsessions should determine the issue.

The recent introduction of the safety net was a further welcome step. It put in place something similar to the excess. With this, Australians now know that 80 per cent of the gap above the first, say $300, will be paid by the government.


Wiping out this safety net - part of the cost of giving septuagenarian millionaires free health care - would be a serious error. Instead, we should gradually expose the health market to the beneficial effects of competition. At the present time, with most health costs paid by government, there is little control and no incentive for suppliers to compete about price. And entry into the medical profession, especially as a specialist, is still too restrictive. The move of nursing to the universities was an error. Entry should be through an apprenticeship, with graduate programmes available to those nurses who wish to specialise later in their careers.

The idea that health, or the universities, should be isolated from the rest of the economy, and provided “free” by the government is a concept which can never work. It is, will always be, both a bottomless pit for the taxpayer, while never being able to provide the level of service which citizens in an advanced society deserve. It will be said that health is different, but we leave other necessities to the market, for example cars, homes, and food. Imagine if the government levied us so that some agency could provide us with the cars, food and homes it decided we deserved. There is no need to imagine the waiting lists, the waste and the quality that would result. Just look back to the wonderful achievements of the USSR.

Health care needs a competitive market. The role of the government should be to ensure that a safety net exists for the needy, the markets for health products and services and for health insurance are competitive, and that there are a range of insurance providers, including mutual insurers. Above all, government should see that we are able to insure against calamities, at reasonably competitive premiums.

Of course it is difficult to change a system that is already in place, especially one in which so many political ideologues have vested interest. But we do not need the government to take our money to pay for the occasional visits to a GP, just as we don’t need it to tax us to pay for visits to the dentist or the grocer, and for visits from the plumber or the TV repairer.

And by insisting that all the health and health insurance markets are more competitive, not only can we return to the golden age of health care we had in the 70s, we can improve it.

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About the Author

David Flint is a former chairman of the Australian Press Council and the Australian Broadcasting Authority, is author of The Twilight of the Elites, and Malice in Media Land, published by Freedom Publishing. His latest monograph is Her Majesty at 80: Impeccable Service in an Indispensable Office, Australians for Constitutional Monarchy, Sydney, 2006

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