Dr James Gillespie, Deputy Director, Menzies Centre for Health Policy, writes:
Mark Ragg has reminded us that the undoubted successes of Australian health care are blighted by deep inequalities. The most worrying thought that emerges from his well presented figures is that these are not just hangovers from an earlier era soon to be swept aside by the tide of progress. New, perhaps more recalcitrant forms of inequity are being built within the system.
He presents the growing cost of private health insurance in a fairly conventional form – noting the growing, uncapped cost of the Commonwealth government’s subsidy. Those justifying this subsidy paint private insurance as the thin red line saving the public hospitals from overwhelming waiting lists. Ragg shows the hollowness of this defence.
However, he gives an exaggerated impression of the financial strength of the private health funds. While most made good returns investing premiums and government subsidies during the boom years, margins on health insurance business remain very low. With the collapse of investment markets, the pressure on solvency – and for higher subsidies and premiums – is becoming more intense, posing the Rudd government with some interesting policy choices.
These common critiques of PHI miss some more important changes in the health system. New forms of inequality stem from a drift of medical practice to the private sector.
It is not just that the private sector is offering higher quality services – in a growing number of areas of practice it is difficult or impossible to find medical services in the public sector. This drift, unannounced, but with a major impact right across health policy from specialist training to access to care, is the most profound legacy of the Howard era.