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Issue #1710      November 11, 2015

Medicare privatisation at full tilt

The federal government now has six different reviews into different aspects of the health system as it embarks upon a complete “revamp” of the system. The latest is a review of private health insurance. The government is hell-bent on the destruction of Medicare and the privatisation of all health services – the Americanisation of Australia’s health care system. The private health insurance (PHI) sector will be deregulated and the cost of premiums will rocket as the PHIs extend their coverage. The only healthcare the government is committed to is the health of the PHIs and the corporate sector.

The major PHIs, including the now privatised Medibank, and other corporates such as Serco, are lined up to take the pickings. The Business Council of Australia has also got into the act.

The government is going through the motions of holding a public consultation on private health insurance and gaining a feeling for public opinion to enable it to sell what amounts to the privatisation of Medicare.

Health Minister Sussan Ley speaks in terms of the need to “find inefficiencies of unnecessary regulatory burdens in the system that will free up private health providers.” It won’t save patients any money – quite the contrary.

Like the taxation review (see page 1), “everything is going to be on the table”, says Minister Ley, referring to the various reviews. And it will be. Every element of Medicare will be on the table for grabs by the private sector. And like the taxation review, the government already knows what the outcomes will be.

End of bulk-billing

The freezing of Medicare rebates by successive governments has already seen many doctors abandon bulk-billing. The standard fee in many practices is now $70-$78 for a Level B 15-minute consultation with a rebate from Medicare of $37.05.

Private health insurance premiums have been rising at a rate twice that of inflation while wage rates for many have fallen. PHI is increasingly unaffordable for families.

This is reflected in the fact that Australians downgraded the level of or cancelled half a million policies last year. Downgrading means either increasing the excess they pay for hospitalisation or not covering themselves for the full range of eventualities.

In the name of removing “unnecessary regulatory burdens” the government is set to abolish the compulsory community rating where everyone is charged the same rate for the same product. The funds have long lobbied for its abolition so that they can charge aged-related premiums.

The average amount the funds pay out to hospitals and for other services per annum varies considerably between ages:

  • $440 for 20-24 year-olds
  • $630 for 40-44 year-olds
  • $3,360 for 70-74 year-olds.

The government is also bowing to health fund demands to be able to vary the premium according to risk factors such as smoking or non-smoking, gender, obesity, state of health, health risk factors as well as age.

It amounts to treating people like a car – the make, model, where it is garaged, who was responsible for the accident, etc, determines the cost of the policy.

Everyone will be hit

At first glance, it would appear that those who do not have PHI should have nothing to fear. That is not the case. Prime Minister Malcolm Turnbull has indicated that the private health insurance funds should be able to offer cover for medical and other out of hospital services such as xrays, pathology, etc. At present they are limited to private hospital coverage.

In fact, the government wants to hand over the whole administration of Medicare benefits to the private sector, just as they did the Commonwealth Employment Services.

Companies like Serco are looking to take over the administration of Medicare and public hospitals. The PHI funds are seeking coverage of Medicare items which up to now they have been denied. They will receive payments from the government per member instead of Medicare directly providing rebates.

The government tries to defend privatisation, which would spell the virtual end of what remains of bulk-billing, by saying it would be cheaper for patients! They would not be out of pocket by as much if they had private insurance to cover such medical services. There is some discussion about a safety net for concession card holders.

“Public consultation”

At the same time a questionnaire on the Department of Health’s website seeks people’s views on the extension of PHI to cover areas which they are not presently allowed to cover. These include GP consultations, specialist consultations, diagnostic imaging, CAT scans, pathology, radiation therapy, medial oncology, renal dialysis, and community based palliative care.

The government’s questionnaire warns: “If insurers were permitted to extend coverage to health care services not currently covered, and knowing that this would lead to an increase in the price of premiums, which services should be covered?” A list is offered to choose from.

So instead of the present co-payment, a patient would pay premiums to a PHI which include a layer of profits. It would cost more.

Amongst the many other, often loaded questions, the public is asked to name up to three factors they value most about private hospital treatment cover.

Amongst the six options is: “By purchasing private health insurance I am taking pressure off the public system and Medicare.”

This question not only repeats the myth that PHI takes the pressure off the public system but reads as though PHI companies have already taken over Medicare’s areas of coverage!

What PHI does is divert funds from the public system. Without the $6 billion per annum taxpayer funded rebate on PHI on premiums, the private hospital system would collapse. As a system in its own right it is unsustainable.

Patient costs rising

The Business Council of Australia, representing the largest corporations in Australia, has joined the chorus of demands for cuts to health spending, with references to “unsustainable growth rates in health expenditure.”

The BCA noted in a paper presented to a health roundtable in Sydney last month that, “The share of total health expenditure met by individuals via out-of-pocket expenses is growing. It now accounts for 20 percent of overall costs, which ranks as the highest of all comparator countries.”

These expenses include medicines, co-payments where doctors do not bulkbill and private health insurance premiums. There is also the Medicare Levy paid by individuals through the taxation system.

Out-of-pocket spending on health has grown at an average annual rate of 6.2 percent over the decade 2003-04 to 2013-2014, 17.8 percent of total health expenditure in 2013–14.

The government is preparing to hand over the running of Medicare to the private, for-profit sector. The cost cutting is not to reduce the cost to people, but to reduce government spending and for the benefit of the private, for-profit sector.

The cost of health services for the public is about to go through the roof. Accessibility and quality will be the casualties.

Over time patients will find they have little choice in hospital or specialist or even what treatment they will be covered for – yet choice is one of the key rationales used to defend the private system. That is if they can afford to use the privatised, deregulated system. Welcome to America!

Australia, in the original Medicare, had one of the best health systems in the world, with some of the best outcomes. It was funded centrally by government revenue, there was universal access with bulkbilling and quality public hospitals.

Medicare is worth fighting for.

Next article – Struggle at Uluru

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