Andrew Podger, the former Health Department secretary and public service commissioner, may be in China at the moment, but he is keeping a close eye on the Australian health scene. And he doesn’t sound too impressed.
He writes:
“To call the Government’s private health insurance (PHI) proposals ‘reform’ is nonsense: it is just an extraordinarily clumsy way of grabbing money from higher income people earners, whether or not they have PHI. There are much easier ways to raise such revenues to fund public hospitals – just raise taxes (ie drop some of the totally unnecessary tax cuts).
If the Government wants serious reform of PHI policy, it could go in either of two directions:
• To the left, curtailing subsidies to PHI, preferably by abolishing the PHI rebate entirely and abolishing the Medicare levy surcharge (or making everyone pay it, to raise some revenue); or
• To the right, opening up the possibility of PHI taking a wider role (as advocated by the NHHRC), turning the PHI rebate into a risk-rated premium in exchange for the funds taking full responsibility for their members, including any public hospital costs; and dropping the Medicare levy surcharge (or again, applying it to everyone).
Instead, we have this silly idea of means testing the rebate (with the risk of returning to the bad old days of spiralling premiums as PHI becomes increasingly focussed on the elderly and unattractive to the young and healthy), then attempting to avoid this risk by raising the levy surcharge (which must be the crudest form of subsidy for any industry, with no efficiency benefits whatsoever).
So, if you are on a high income and have PHI you lose the rebate, and if you are on a high income without PHI you face a higher levy surcharge.
For goodness sake, even if the Government is not interested in reform, it would be better and simpler just to raise taxes on higher incomes (ie drop the tax cuts which were never justified), rather than make the dog’s breakfast of PHI policy even more of a mess.
But if it is interested in reform, the Government needs to start being serious.
Personally, I would like to see a trial of the second option above, to see how well the funds could operate with wider responsibilities for their members and in a proper competitive market.
I do not think we know enough yet to accept the National Health and Hospital Reform Commission’s preferred long-term model, but it is certainly worth a trial.
Others, I know, would prefer the first option above, but I fear it would place too much reliance on the capacity of the national insurer and not give the public enough choice. But it would be serious reform, unlike the current proposals.”
