Medicare under threat

It is important to reflect upon the nature of the changes that have been occurring in health over the last decade and the impact of these changes.

Increase in health expenditure by government and individuals

The latest health expenditure data from the Australian Institute of Health and Welfare (AIHW) highlights our increasing health costs. According to Health Expenditure Australia 2003-2004, health expenditure in Australia in 2003-04 was $78.4 billion or $3,919 per person. This means that health expenditure as a proportion of Gross Domestic Product (GDP) now stands at 9.7 per cent for 2003-04 up from 8.3 per cent a decade ago. The current OECD country average health expenditure to GDP ratio is 8.8 per cent.

At the same time out-of-pocket spending on health by Australians grew, in real terms, by 6.2 per cent in 2003-04 compared to 5.0 per cent the previous year. Real growth in expenditure by individuals between 1993-94 and 2003-04 was 5.4 per cent per year, 0.8 percentage points above the real growth in health expenditure of 4.6 per cent per year over the period.

The “backflip” of the Howard Government last year on the Medicare Safety Net thresholds will also put upward pressure on out-of-pocket health expenses. Before the last federal election the government gave a “rock solid, iron clad” guarantee that the safety net thresholds would continue to trigger at $300 for low income earners and $700 for others. After the election the threshold triggers were increased to $500 for low-income earners and $1,000 for others.

Unfortunately the writing was always on the wall - the "rock solid, iron clad" guaranteed Medicare Safety Net was bound to be under threat once the federal election had passed. The primary objective was to neutralise health as an election issue, not engage in rational and sustainable health policy formulation.

The promotion of strategies such as means testing access to public hospitals and the introduction of co-payments for public health services are also of concern to PHHAMAQ. Such arrangements punish the sick, are inflationary and unfair. A basic tenet of Medicare - that of ensuring universal access to health care based on need and not ability to pay - is undermined by such policies. Such policies seek to shift responsibility for payment from a collective responsibility (through taxation) to the individual. They will not stop ever increasing medical costs. The only thing that changes is who will pay. The government is merely transferring some of their liability for its failed policy on to the sick.

Promotion of private health insurance

According to Health Expenditure Australia 2003-2004, in 2003-04, $8.1 billion in funding was directed through private health insurance but $2.5 billion of that figure was funded by the Australian Government's health insurance rebates (up from $2.3 billion the previous year). The cost to taxpayers of the private health insurance subsidy is now anticipated to exceed $3 billion per annum. Premiums also increased from April 1, 2005 by an average of 8 per cent (premium increases take effect each year from April 1).
 
All taxpayers are subsidising a “benefit” that is received by less than 50 per cent of the population. Repeatedly research into the rebate has demonstrated that the benefits of it disproportionately flow to the more well off and the rebate has failed to meet one of primary objectives - to take pressure off the public hospital system. It is the case that treatments in the private sector have increased in recent years, but this has mostly been in the area of elective and lower cost procedures, some of which are “self funded” rather than covered by private health insurance.

According to Private Health Insurance Administration Council (PHIAC) data by December 31, 2005, 40.2 per cent of Queenslanders had private health insurance. This compares to 43.1 per cent nationally. These figures have been relatively stable for the last two to three years. The level of private health insurance in Queensland needs to be examined in the context of Queensland being the most decentralised state in Australia.

For many Queenslanders (especially those west of the Great Dividing Range) there are no local private hospitals - they are totally reliant on their local public hospital for health services. It is in all our interests - whether we are residents in metropolitan or regional areas, or in rural or remote areas of the state - to maintain a strong and viable public health system. For catastrophic or emergency events the richest person in Australia is likely to be taken to a public hospital for treatment.

A key issue for those with private health insurance is the magnitude of the gap between what the health fund pays and the out of pocket expenses. Not only do people have to find the funds to pay for the health insurance premiums they also have to fund the “gap” in many (if not most) instances. This uncertainty and lack of transparency regarding costs is a key barrier to maximising the take up of private health insurance. Until such time there is some certainty about these costs this will remain the case.

When public hospitals become a “safety net” for the financially disadvantaged then the better off in our community have little or no interest in ensuring that public health services are well resourced through the taxes that we all pay. Sixty per cent of Queenslanders do not have private health insurance. Many simply cannot afford it, or it is of no use to them because they have no local private hospitals.

Many of those who are better off consciously choose not to take out private health insurance because they are committed to the maintenance of a universal health system and the concept of access to care being determined by clinical need. They pay additional tax though the Medicare Surcharge because of this choice. Some (rich and poor alike) also see private health insurance as representing poor value for money and see the private system as being unsustainable.