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There is no need for a Chicken Little response - Medicare reform is needed

By Russell Schneider - posted Friday, 9 May 2003

Whenever governments attempt to reform health policy there is invariably a flurry, if not a storm, of opposition and criticism which always reminds me of the story of Chicken Little and his claim "the sky is falling".

So we shouldn't be surprised at the current outbursts about the federal government's Medicare reform package. Nor, however, should we assume the noisy opponents of change are necessarily right or representative of either the medical profession or the community as a whole.

In fact the reforms, combined with a very generous public-hospital offer which the federal government put on the table - the only string being a requirement that the States match it and commit that they will not withdraw their own funds from the public sector - represent the strongest shoring-up of Medicare for more than a decade.


Perhaps the fact that the initiative is coming from a Liberal government is the reason so many left-wing groups are decrying what they would like to portray as the "end of Medicare": they can't bring themselves to admit that what is being proposed makes sense. Nor can they see the absurdity of their own simplistic solution that all the government needs to do to restore universal bulk billing (a left-wing icon) is pump massive amounts of money into the system and fund it, at least in part, by withdrawing the 30-percent rebate on private health insurance.

Such a "solution" would, of course, exacerbate the problem. Simply increasing the Medicare rebate is just inflationary: it gives no guarantee of more bulk billing or lower co-payments. Logically, doctors would simply maintain their existing margins and pocket the increased Medicare rebate - unless the constitutional ban on capping doctor's fees is removed. So why don't the opponents of the current reforms demand a cap on doctor's fees?

I'm not suggesting this be done but if people argue doctors will exploit the government proposals, they must accept that doctors will exploit their own proposals. The only solution is constitutional change - why aren't they pressing for that?

Instead they want to fund a move which must, on their own logic, be inflationary, by withdrawing or reducing the 30 per cent rebate on private insurance. This would simply exacerbate existing public-sector problems, as the 2.2 million people who will go to private hospitals this year drop their cover and demand public treatment.

Despite the folklore, the fact is Medicare was never designed to provide every Australian with free (i.e., at the point of service) bulk-billed visits to every doctor. Bulk billing was intended to hold down medical incomes on the assumption that competition would encourage most doctors to bulk bill and reduce the capacity of others to charge significantly more than the fee schedule. I know, 'cause I was there.

Unfortunately, some people - particularly those loudest in opposing the changes - seem to think that a fair and equitable health system revolves around letting rich people visit the doctor (or take up space in a public hospital) without being charged a fee. If that's equity I don't want any!


I lost my taste for communism when I went to Moscow in 1975 and saw old ladies sweeping streets in falling snow, while the wives and girlfriends of the apparatchiks swept past in their mink coats to their chauffeured limousines!!

The fact is the wealthy, the well educated and the well connected will always do better than the weak and the poor under any system. In a democratic and equitable society the role of government is to try to establish structures which minimise that situation. Universal bulk billing does not. It is simply upper-class welfare.

As I understand it, the government's proposals will go a long way to creating structures which will, for the first time, give people on lower incomes some certainty that they will be able to be bulk billed.

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About the Author

Russell Schneider GAICD was CEO of the Australian Health Insurance Association from 1983 to 2006. Before that he was Canberra Bureau Chief and Political Correspondent for The Australian. He was a director of a major health insurer from 2006 until 2017.

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