Is Medicare sustainable

Many myths derail the public discussion of health care options.

Health care myths,

for example:

  • As Health Minister, Peter Dutton stated that Medicare was unsustainable because diagnosis of Dementia was about to soar.
    ABC Fact check researched extensively and found “Mr Dutton predicts a fortyfold increase in the number of dementia cases being diagnosed each week. This is not supported by the evidence, which predicts cases will triple over the next four decades”.
  • National Commission of Audit chairman Tony Shepherd stated that people are visiting the doctor more than 11 times a year and he doesn’t believe Australians are “that crook”.  ABC Fact Check found “Australians visit the GP around five times a year, and visit the doctor, which has a broader definition, between six and seven times a year” and quoted the OECD’s Health at a Glance 2013 stating “Australia was almost identical to the OECD average…”

The broader economy has its own sizable share of myths,

for example:

  • Many Australians believe they pay a lot of tax.  In fact Australia is one of the lowest taxing economies in the developed world. In 2009, Australia had the sixth lowest tax-to-GDP ratio out of 34 OECD countries see table.
  • The Australian government allocates a lot of money to welfare to support slackers when in fact Australia ranks 25th out of 30 OECD countries in terms of expenditure for unemployment see article extract.
  • In March 2015 Joe Hockey revived an old myth about international competitiveness of tax rates in his seriously flawed tax paper.
    See Tax Discussion and help  steer the discussion toward a better funded future for Australia and its health care.

Perhaps the biggest myth of all

is that charging people to see a GP ie. a tax* on sick people,  will save Australia money.

(* the tax was initially labelled a co payment by the Federal government but is now being implemented as a creeping co payment by freezing GP rebates, rising costs will force GPs to abolish universal health care ie abandon bulk billing and charge increasing fees.)

It may save the Federal government money in one budget item but  State governments who fund Emergency Departments and Hospitals, are already seeing a lot of unnecessary visits and unnecessary cost because people are not seeing their GP’s enough.  In some cases people lose their lives or suffer life long disabilities or sickness because they did not see their GP early enough.

Visiting a GP is preventative medicine, addressing issues before they reduce productivity and quality of life, and before they develop into more serious issues.

Discouraging GP visits will add to State Government Emergency Department and Hospital work loads, and push up costs. At the end of the day, we the public are paying the State Government’s costs.

Australia loses productivity and part of its investment when people  die or suffer ongoing problems because they didn’t see a GP soon enough.

Good News

Ross Gittens, the Economics Editor at the Sydney Morning Herald, pointed out in his article Health spending crisis isn’t real 22nd Oct 2014, “The feds’ health spending in 2012-13 actually fell by 2.4 per cent in real terms” and looking longer term he  concluded “…the long-feared problem of “excess health inflation” seems to be going away”.

Looking beyond the political spin, Ross Gittens article, Why Health Spending is Sustainable and Will be Sustained  provides compelling logic as to why there is no major issue with the future of health care system in Australia.  Well worth reading.

For graphs compiled from official government figures that support Ross Gittens’ article, read Glenn Murray’s article.

A Cost Saving Success Story

Dr Spiers-Butcher has spoken of the significant savings generated by the government’s investment in the campaign to reduce Tobacco smoking.

Medicare is a driver for future Australian prosperity

The United Nations, International Monetary fund and OECD amongst others have published statements on the reduced national growth that results from increasing inequality.

A free universal health system like Medicare is a key driver to lower inequality. The OECD states that public services such as high quality health care delivered to the bottom 40% of income earners reduce inequality and that  inequality of the bottom 40% reduces national growth for more detail, see internal link Key findings from the OECD publication “Inequality and Growth” and their relevance to Australia’s health system.

Medicare is Sustainable

It simply requires governments to remain committed to supporting Medicare for the whole community ie providing free universal health care.

Funding by the national taxation system ensures those who can afford to pay more, do pay more.

There are however, areas of health care that should receive more public attention and discussion.

For example:

“The Private Health Insurance companies ….. are really powerless to control both the quality and cost of healthcare.”
“If a private insurance company is too tough the provider will take the business to a competitor. The worldwide lesson is that only a single insurer can have a real effect on costs and promote quality.”
see external link John Menadue. The unfairness and waste in health

Its no surprise then that a study by the Melbourne Institute of Applied Economic and Social Research, The University of Melbourne found that private health insurance rebates has been the “fastest growing component of government health spending, which had risen from $1.4 billion in 1999–2000 to $4.6 billion in 2010–11”.

Their modelling found that government savings are available by reducing the rebate.  Savings would exceed the additional cost of any people who would move to the public health system.

The private insurance rebate was introduced at the peak of the minerals boom  “only 84 cents of every dollar collected by private insurers is returned as benefits, …… By contrast Medicare returns 94 cents in the dollar. The USA, highly dependent on private insurance, provides the standout example of administrative overheads. Only 69 cents in every dollar Americans spend on health care comes back in terms of services.” external link Ian McAuley, Jennifer Doggett and John Menadue. The case for government funding of healthcare.

The Australian Council of Social Services 2015 submission to the government says the rebate has not lived up to its promise… savings in the order of $3 billion are possible (after some additional hospital expenditure).

47% of Australians had private health insurance at end 2013. The obvious questions are:

  • why government funds should be expended to help underwrite health insurer’s profits without an equivalent reduction in public health care costs?
  • why government funds should be expended to encourage people to use a system that returns less benefit per dollar than the existing public health system?

Dr Ben Spiers-Butcher and Adam Stebbing published a paper “Reforming Australia’s Hidden Welfare State” 2009 which contains the following main points (my bold emphasis):

  • As Australia enters recession and the Budget enters deficit, one of the least effective and most unfair forms of government spending has increased dramatically. Tax expenditures (for example, tax breaks on superannuation, the private health insurance rebate, childcare rebate and housing concessions) are increasing in number and cost, despite being significantly less equitable than other forms of government assistance.
  • Because tax expenditures do not go through the same review process as normal government spending, they tend to be less accountable and transparent. As a result, tax expenditures attract less media attention and less democratic scrutiny. It is essential that their growing slice of Commonwealth spending be scrutinised and, in some cases, reconsidered.

The Australian Council of Social Service 5/3/2015 response to the Inter Generational report includes a paragraph echoing Spiers-Butcher and Stebbings’ concern:

“We also need to ensure that funding for health services is cost-effective and does not contribute to cost inflation. This calls into question the value of health insurance rebates, which are not reducing the cost of health care in the public system.”

More Examples

  •  Privatisation adds a heavy overhead taking resources away from health care and brings an extensive array of risks and issues see Privatisation.
  • International treaties, agreements and partnerships designed without protection for the future well being of Australians can cause:
    • Higher prices for medicines
    • Undermine the Pharmaceutical Benefits Scheme (PBS)
    • Allow foreign investors to sue the Australian government in secret tribunals if the government enacts laws or policies that protect public health
    • Introduce restrictions on public health regulations on food

For more information see Treaties, Agreements and Partnerships

For a comprehensive list of issues

including some external links to other groups fighting for a better Australia see Health Care Threats and Opportunities Map