Cuts of $314 million to public hospitals and $2.6 billion to Medicare over the next four years ensure that the public health system will be a lot sicker as a result of the August 20 budget. Combined with the Coalition's subsidies to the private health insurance industry, this takes Australia much further down the predominantly private US road, where more than 40 million people are too poor to pay for private health insurance but are excluded from Medicaid.
Already private health insurers seems to be cashing in on the government's efforts to force more people into the funds. It took barely a week after the budget for most private insurers to announce substantial premium rises. This will mean that the government rebate will go straight back to the private insurance funds, and many pensioners will be forced to quit the private system. As the Doctors Reform Society said, the taxpayer is now being forced to fund private health insurance while Medicare is being neglected.
An AGB McNair poll published in the August 28 Sydney Morning Herald revealed that a majority of the government's main target group — those earning over $80,000— would not take out private health insurance, opting instead for the cheaper option to pay the $10 a week Medicare levy increase.
The poll also revealed (what most would have suspected) that an overwhelming majority of low-income families (80%) have not been persuaded by the government's package to sign up for private health insurance. They will hardly be likely to now.
Acting health minister Jocelyn Newman blamed the former Labor government for the decline in private health insurance, describing it as "the most serious threat to the viability of the health system". This ignores the real reason for the current crisis in the public health system — the government's moves (begun by Labor) to downgrade Medicare in favour of a user-pays system and to take the knife to public hospital funding.
The $10-20 million a year the government estimates it will collect from private patients in the public hospital system (a lucrative ploy for private medical specialists and cash-strapped hospital administrations) will not nearly compensate for the size of the cuts to public hospital grants. Worse, there will be two queues; a fast one for the privately insured and a long, slow one for those relying on Medicare.
This, combined with the transfer of responsibility for health to the states, makes clear that the Coalition is not the slightest bit interested in "fairness" and "equity", the buzz words it's using to sell its Medicare levy increase.
It hasn't, for instance, promised to channel this extra money back into the public hospital system. Meanwhile, such a measure sets a precedent for other "special" levies, further undermining the universality of Medicare.
While it would dearly love to, for the moment the Coalition isn't prepared to pay the political price to abolish bulk billing and fight for a Medicare co-payment scheme, an idea advocated in the early 1990s by Labor "left" Brian Howe. Nevertheless, the direction of the government's changes are clear enough.
There is ample evidence that privatised health insurance costs a lot more to administer (14%) compared to Medicare (4%). Recent figures from the Australian and New Zealand Journal of Public Health show that health costs in Australia from 1973 to 1990 declined 1.6% while those in the US rose 26% and in Canada 22%.
An alternative course, which would be fair, would be to end the Medicare levy, dramatically increase funding for hospitals and community-based health centres and tighten scrutiny of rebates paid to profit-oriented health bodies.
Universal health care could be funded by increasing taxes on those who can afford to pay — the rich — and rechannelling money away from such wasteful exercises as the purchase — for $5 billion — of six submarines fitted with Tomahawk Cruise missiles.