Government health policy reinforces corporate power
BY JONATHAN SINGER
The Coalition government's Lifetime Health Cover policy has apparently worked where its previous efforts to increase private health insurance coverage have failed, thereby strengthening the insurance companies' position in the battle to dominate corporatised medicine.
Up to 40% of all Australians now buy private health insurance. Many younger Australians, in particular, have decided they would rather take out insurance now than have to face insurance premium surcharges of up to 70% later.
Just 30% of people were privately insured at the end of 1998 and the proportion of people covered was falling at a rate of more than 1% a year. Thirty-two per cent of people were insured at the end of last year, after the government rebate on insurance payments was increased to 30%.
After losing money for years, health insurance companies' bottom lines are now almost certain to improve. The outlook for health care for most Australians, however, is a lot gloomier.
Health funding
The government claims increases in private health insurance will improve the resources for, and reduce the pressures on, public health care. This is not correct.
Governments, federal and state, have continually cut public health funding relative to its cost. Their aim has been to subordinate public health care to private, by reducing the quality and availability of the public system. If people now shift away from public to private hospitals, there is no reason to believe funding would not be cut further, under the justification that fewer people are using the public system.
These cuts have increased the pressures on the public hospitals in spite of increased private hospital use, according to findings by health services management professor George Palmer, reported in the June 24 Sydney Morning Herald. Pressures include longer waiting lists, financial difficulties, poorer patient services and worse employee working conditions.
As planned, those who have taken out private health insurance tend to be younger and healthier — the very ones who are less likely to use any health care services, or, if injured, will require emergency treatment, which is only available through public hospitals anyway.
The introduction of Lifetime Health Cover was premised on claims that such people's avoidance of private insurance was leaving older people, who are more likely to be unhealthy, paying higher premiums to cover the insurance companies' outlays. Actually people aged 80 or older are the age group least likely to buy private insurance, but all people over 65 before July were excluded from the surcharge.
The government only wanted to apply the "stick" to some of the more healthy, who will bring money but few costs to the insurance companies. The companies' problem will now be how to hold members given continuing increases in premiums: ratings agency Standard and Poor suggests yearly 10% rises in premiums are possible. The companies will now also find selling first time insurance to people over 30, who face a surcharge, much harder.
The increasing number of people privately insured will also increase the cost of the 30% rebate to government revenue — more than $2 billion in 1999-2000. This money is then not available for government health (or other) spending.
Struggle for control
Russell Schneider, chief executive of the Australian Health Insurance Association, defended the rebate in the February 24 Australian Financial Review. "No tax-based system could meet th[e] demand [for health care] without bankrupting the economy", he asserted.
In fact the impact of health care costs on the economy is unrelated to the method of collecting the money to pay for them — except that the administration costs of government funding (4%) are less than those of private health insurance (13%) and public hospitals provide health care more cheaply than private hospitals. The major difference is that the private insurance companies will be bankrupted if not enough people buy their product.
By comparison, the Australian's economics editor, Alan Wood, was disturbingly honest on July 11: "The health funds' fortunes have been turned around by a mixture of bribery [the 30% rebate], extortion [an additional 1% Medicare levy on higher-income earners without private insurance] and fear [the response to Lifetime Health Cover]". The reason for such unusual honesty is that Wood sees the health care system in Australia heading where he wants it to go: abolition of Medicare and corporate control of health care.
Medical practitioners have traditionally dominated health care service provision and costing in Australia, having established "fee-for-service", a system of payment for each consultation or procedure performed. A 1995 Organisation for Economic Cooperation and Development report described this system as the "root cause" of the pressure on health spending.
However, high costs and increasingly expensive health care are principally found in the privately funded sector, since federal and state governments have held down the Medicare rebate schedule and the public hospitals' budgets.
The Australian Medical Association tries regularly to reassert the doctors' monopoly. Most recently, in a July 5 National Press Club address by recently elected AMA federal president Kerryn Phelps, the association proposed means-testing bulk-billing or increases in the Medicare schedule (from $22.50 to $44 for a basic consultation), as well as supporting improved funding for public hospitals.
The private health insurance companies operated easily enough under fee-for-service while there was no alternative public system. With Medicare in existence, however, they need to keep premiums down and offer benefits, such as "no-gap" insurance, under which the privately insured patient faces no out-of-pocket expenses for private medical treatment — exactly the kind of services they don't want to offer.
The insurance companies, therefore, want to gain control over the services provided by doctors and the charges for them. The June 9, 1999 Bulletin notes 4% of medical services then involved contracts with hospitals or funds.
But these companies have been largely unsuccessful, perhaps because, as corporations controlling consumers' rather than producers' funds, their position is unusually weak. Other corporations have an opening to control health care provision: in particular, private hospital, pathology and radiology companies can "vertically integrate" general practitioners (GPs).
The May 24 Australian Financial Review reports on the latest corporate entrant into general practice, Sonic. This "billion-dollar pathology giant" found that "pathology referrals which we had been faithfully doing for years ... were suddenly removed because those medical centres happened to be bought by Primary", the managing director, Colin Goldschmidt, told the newspaper.
Many hundred of GPs are now working in the contract structures of such corporations, which also include major private hospital owner Mayne Nickless.
The scope of medical centres is even broader. Con Costa, vice-president of the Doctors Reform Society, told Green Left Weekly: "There is a flight of general practitioners to the medical centres. Forty-five percent in NSW and 35% in Victoria are captured by these mega-centres.
"Corporatisation in general practice is not an accident. The government has restricted provider numbers for new GPs, to try to save money on Medicare. GPs can't find locums, people to replace us, to take holidays. The rebates, along with the public hospitals, have been squeezed. [There are also the] increasing demands of computerisation, accreditation, and extended hours.
"Many GPs can't cope. The result is they are forced to the medical centres, where they just sit and see patients, and get perhaps 45% of the rebate but don't have all the other problems", he said.
The corporate health care providers are thus the companies best positioned to establish "managed healthcare", wherein services are provided according to profitability, not medical needs as perceived by doctors or patients.
Medicare's future
But these corporations also need the private health insurance system to provide people who can afford their fees, especially those set above the Medicare rates. In the end, to raise the profitability of both the private health care and the private health insurance companies, Medicare must be brought down.
Wood writes "Medicare's whole schedule and cost control will be challenged and blow out", so long as private fees are higher. He doesn't say who will challenge Medicare, but any of the major parties could, in their own way.
Political commentator Laurie Oakes, in the August 1 Bulletin, states "before the 1996 election Howard ... gave an 'absolute guarantee' to retain Medicare, bulk-billing and community rating". This is somewhat disingenuous: community rating was the requirement for a private insurance premium rate which would apply regardless of age, which Lifetime Health Cover has destroyed in all but form.
So this "absolute guarantee" has now joined the realm of "non-core" promises and the only question is how long Medicare itself will take to follow.
Labor proclaims backing for Medicare, but won't touch the private insurance rebate, either. Its NSW Right faction actually dealt with then balance-of-power independent Senator Brian Harradine to get the rebate passed by the Senate, according to Oakes.
The Democrats also support private health insurance. Their concern about the rebate is its ineffectiveness in helping the insurance companies.
A call by Doctors Reform Society president Peter Davoren, for the federal government to make the use of the private health system mandatory for privately insured patients, exposes the ongoing use of the public health system even by the privately insured.
But private for-profit provision of health care, as with other goods and services, is the fundamental problem. A private interest will always seek to drive up health care cost levels in order to benefit itself.
Public, democratic determination and administration of an adequate health budget, including compensation of health professionals for the rigours of their training and work, is the only way to both contain and fund a high quality health care system.