As Minister Nicola Roxon intimated on Radio National this morning, the cross-benchers are under pressure to support plans for means testing of the private health insurance rebate.
No doubt they are also coming under heavy pressure from various private sector interests to vote against the plan – it would be fascinating to know who is saying what behind closed doors.
Perhaps the cross-benchers should ask themselves: is there an alarmed chorus from the rural, remote, Indigenous and public health sectors warning them against supporting the proposal?
Or perhaps they could consider asking an independent group to conduct a health impact assessment of the rebate – how much health has it delivered for how many billions of investment?
Meanwhile, here is a timely analysis of the proposal from the Parliamentary Library’s FlagPost blog (thanks for allowing the cross-publication).
It focuses mainly on arguments about the impact of the rebate on hospitals, and doesn’t directly examine whether one of the downsides of the rebate is in keeping the funding and policy focus on hospitals rather than primary health care.
***
Does the private health insurance rebate relieve pressure on public hospitals?
Amanda Biggs writes:
As the Government once again prepares legislation to means test the 30 per cent private health insurance rebate—see this recent Flagpost for background—arguments over whether the rebate eases pressure on public hospitals, or exacerbates it, are likely to re-emerge.
Because the rebate subsidises the purchase of private health insurance, which can be used to meet the cost of private hospital services, the private health insurance industry and others argue that it keeps pressure off public hospital services. They warn that means testing the rebate will encourage people to drop their private cover and then turn to the over-stretched public hospital system when they require medical treatment.
The Australian Council of Social Services counters that the rebate redirects much-needed funding away from the public system—which those on low incomes rely upon—to the less efficient private sector.
Assessing the impact of the rebate on hospital utilisation rates might help resolve the arguments, but as a 2005 Background Note from the Parliamentary Library suggested, the evidence is not clear.
In attempting to assess the impact of the rebate in the period following its introduction in 1999, this paper compared demand for public and private hospital services and the length of public hospital waiting lists. It found that private hospital utilisation rates had increased following the introduction of the rebate; the proportion of private hospital ‘separations’ (or episodes of admitted patient care) as a proportion of all hospital separations increased from 34 to 38 per cent.
It also found that private and public hospitals tended to deal with different ‘caseloads’. Public hospitals were more likely to treat emergency patients and those with more severe disease, compared to private hospitals.
However, the increase in private hospital utilisation was not accompanied by a decline in public hospital utilisation rates as might be expected if people were simply shifting to the private sector.
Rather, the paper found that over the same time period, public hospital separations actually increased and waiting times for elective surgery lengthened. In other words, demand for hospital services across both the private and public sectors appeared to have risen following the introduction of the rebate.
When the private health insurance rebate was first introduced, it was argued that it would ease pressure on the public system. This has not occurred; demand for public hospital services has continued to grow and waiting times in public hospitals have lengthened. These indicators might support those who argue that the rebate has failed to ease pressure on the public system.
But as the Library’s earlier analysis also explains, demand for health services is driven by a complex range of factors. The availability of new medical technologies, level and type of funding for health services (including incentives like the rebate), the ageing of the population, the clinical needs of patients and the limited capacity of the health workforce (often the same doctors working in both sectors) are just some of the factors that influence demand.
The personal expectations of patients and their attitudes towards the health system also play a major role. While this makes attributing the growth in hospital services to a single factor, such as the rebate, problematic, it also makes it harder to argue that the rebate has failed to take the pressure off the public system.
A further issue to be considered in this debate is the question of whether the public and private systems are in competition with each other, or do they complement one another. Both the Government and the Opposition have argued they support a ‘balanced’ system (a mixed model of both the private and public sectors), but the evidence that the two sectors complement each other is mixed.
The Productivity Commission found in this recent report, that while there are complementary components and differences in casemix between the public and private hospital sectors, the two also ‘compete to offer substitutable services’.
If the preferred health model is a ‘balanced’, complementary one, then the rebate could be said to play some role in supporting this system, although the extent of its impact remains unclear and continues to be contested.
Regardless of the legislative fate of the means test, the long-running debate over the rebate and private health insurance more broadly is likely to continue. This reflects both the ongoing division of opinion between supporters and opponents of the rebate as well as the difficulty of assessing the impact of a single component in a complex, multi-faceted and interactive system.
• For more Croakey posts on the private health insurance rebate, see:
- Posts from Jennifer Doggett (here and here)
- And John Menadue’s tips for saving billions in health care costs.
I don’t know if it relieves the pressure on public hospitals per se, but I do know that my father, who has private health insurance, spent 4 days in a transit section of St Vincent’s in Sydney (in a bed that was 0.5m shorter than his frame), before being placed in a ward in the public section because the private hospital was full. Unfortunately, while in the public section, he has to pay because he has private health insurance, but gets “public care” (dirty ward, disinterested medical staff etc – I have proof). So, I ask, what’s the point of having private health insurance? By the way, someone at St Vincent’s told me “off the record” that public patients have been placed in the private hospital due to bed shortages.
And a quick point about private health insurance: STOP REBATES FOR QUACK THERAPIES – that will reduce your costs.
I feel compelled to say that my wife has had three procedures as a public patient at a public hospital over the last five years.
On each occasion she received excellent care, the staff – medical and nursing – were anything but ‘disinterested’ and as far as we could tell the hospital was clean albiet running flat out.
Thank you Hobart Royal and staff.
Means test the rebate.
I spent 2 weeks as a private patient in a public ward not that long ago, and my experience could not have been more different to your Father’s @Tomboy. Fantastic and attentive staff, immaculate conditions and the best care you’ll get anywhere in the world. I also have anecdotal evidence of poor experiences, but I think it is important to flag the good ones too. And I didn’t “have to pay” – I was given the option of tapping my private health insurance, or being a full public patient. I chose to claim against my health fund simply because I believe and always have that those who can pay, should.
Oh, yes, and to the point of the blog – of course I believe the rebate should be means-tested. I would be one of those people who lose it, but that’s fine by me. I’d prefer to know that the resources and funding were being directed where they are required, and not as yet another source of middle-class welfare.