Rafa, I don't agree with abolishing this. Private cover is simply essential given the woeful standard of Queensland Health hospitals. Can't speak for the other States. Cost of medical care appreciates exponentially and the rebate makes the security of private cover more affordable.As far a health and education go, there is a lot of room to increase spending there... and have the tax cut... things i would target are
3. Private Medicare Rebate (what exactly is the point of that, certainly that money can also be funneled into the common health budget)
Absolutely this should go. One of Costellos's more bizarre ideas.7. Baby Bonus!!! (What the hell is that!!!)
Rafa, I don't agree with abolishing this. Private cover is simply essential given the woeful standard of Queensland Health hospitals. Can't speak for the other States. Cost of medical care appreciates exponentially and the rebate makes the security of private cover more affordable.
Why support private health insurance in Australia?
Leonie Segal
Leonie Segal is Deputy Director of the Health Economics Unit, Monash University.
The role of private health insurance (PHI) in Australia has not been reassessed since the introduction of Medicare in 1984 signalled bipartisan support for universal health cover reflecting widespread community support. The prospect of an uninsured person, unable to afford urgently needed hospital care was a reality prior to the introduction of Medicare and provided a clear justification for public support for private health insurance. However, with the adoption of a publicly funded universal health scheme, ensuring free access to public hospitals and free or subsidized access to medical and pharmaceutical services, the rationale for public support for PHI was no longer self-evident. But we find a series of ad hoc policy adjustments to support private health insurance. Why? - given public support for Medicare and the associated principle of access to health care on the basis of need.
The policies to support private health insurance are costly. The total cost of the package is over $3,600 million per year; including $1,100m in taxation revenue forgone through exemption of the Medicare levy surcharge, (Smith, Australia Institute), $2,200m in funding the 30% rebate (Australian Institute of Health and Welfare), ~$400m in extra Medicare payments for medical and pharmaceutical services associated with higher private hospital use, and the cost of a tax-payer funded advertising campaign to promote PHI membership.
If this subsidy had been allocated directly to public hospitals, the Commonwealth contribution to public hospitals would have increased by 50%.
What has been the impact of directing these funds to the PHI rebate and tax exemptions? The suite of policies has undoubtedly raised private health insurance membership - from 30.1% of the population in December 1998 to 44.2% in December 2002, with a vast improvement in risk profile - 98% of new members being under 65 years. Most of the increase followed the adoption of life time rating which penalised new membership after 30 years of age and an associated aggressive media campaign encouraging take-up of PHI.
However, the promised fall in PHI premiums has not occurred, with premiums continuing to rise. The young age profile of new members partly explains the absence of any major reduction in demand for public hospital services. Persons under 65 are not big users of public hospitals - occupying only 1/6 of the public hospital bed-days/head as persons over 65. And in any case, those with PHI have an incentive to continue to use the public hospital system to avoid the out-of-pocket costs associated with a private hospital stay. Especially as 50% of all PHI policies now carry front- end deductibles. The potential impact on public hospital demand is diluted by the allocation of over two thirds of the rebate and surcharge exemption to persons who already had PHI prior to the introduction of these subsidies, providing an income transfer to these persons from the tax payer, with no prospect of a change in service use. Furthermore, less than 50% of the rebate is for hospital use, with the rest for medical gap payments (an income transfer to doctors), other health services (through ancillary cover) and administration and profit of health insurers.
Has the policy brought more private funds into the health system? In fact the opposite has been the case. As PHI cover was falling between 1990/1 and 1996/7, the Commonwealth share of the health budget rose only slightly from 42.2% to 43.8%. But following the dramatic rise in PHI membership, it has increased more sharply to 47.5% of the health budget in 2000-01, matched by a severe fall in the PHI share of the health budget from 10.4% in1996/7 to 7.1% in 2000/01.
Have the policies supported a more equitable health system? The evidence suggests not. Exemption from the 1% Medicare levy surcharge only benefits high-income households and, being more likely to take out PHI, they also receive a disproportionate share of the taxpayer-funded rebate. The tax-payer through the subsidy on ancillary cover contributed $578m in 2002 to those with PHI - largely those on higher incomes - towards the cost of community-based private health services. The major item was $290m to support private dental care, far exceeding the Commonwealth contribution to public dental services ($70 m in 1999-00). It is interesting to note that a $22 m subsidy went on fitness and lifestyle equipment, while only 1.3 million went to support dietetic services and similarly occupational therapy.
It can only be concluded from the evidence that the policies to promote PHI are undermining the efficiency and equity of the Australian health care system - a conclusion reached by many health services researchers. The evidence provides a compelling case for a total overhaul of policies relating to private health insurance.
The role for PHI must be re-evaluated in the context of a system of universal health cover, a system underpinned by the principle of access to health services on the basis of need and payment according to capacity to pay - a principle that enjoys widespread community support.
References: Duckett and Jackson, MJA 2000; Smith, Australia Institute 2000, 2001; Willcox, Health Affairs 2001; Deeble 2003; Butler, Australian Health Review 2002; Hall et al, Health Economics 1999.
The true annual cost of the 30% Private health insurance rebate:
Direct cost of the rebate $2.2 billion
Foregone tax via Medicare levy exemption $1.1 billion
Extra Medicare payments (for services due to higher private hospital use) $0.4 billion
APPROX. TOTAL $3.7 billion
Couldn't it also be that the increasing cost of ever more specialised medical procedures is fuelling the rises in PHI premiums? The cost of some procedures was published recently and several were around the $300,000 mark.
You're not taking account of my reason for needing private cover, i.e. the abysmal state of the public health system. I don't enjoy paying premiums, I get annoyed like everyone else when they rise so often, but - given the state of local hospitals - being able to choose my doctor and hospital is absolutely essential.
Probably a different matter if you live in a large city where there are good teaching hospitals.
Agree on both counts. A friend of mine who didn't have private cover had to wait five years for a knee replacement. By that time, he also needed a hip replacement purely because he had been walking unevenly during that long waiting period.I have PHI purely because of my level of sporting activity, my general health and my clumsiness: I need glasses and orthotics every few years, so it pays for itself. I recently had surgery, and still had a gap of $2000 dollars to pay though, so sometimes you wonder... But i'd still be waiting to have my tonsils out if i didn't have PHI.
I still think there needs to be a 'means test' of some sort for health cover, and those than can afford PHI, should be 'encouraged' to take it out, thus leaving more resources in the public system for those who really can't afford it.
Jules
try negotiating for services paying cash - you'll find the service better (prompter and smilier) than private health and cheaper - haven't had private health insurance for 40 years and at 60 ame way way in front - raised a family in the process so the cynics don't come back with yeah, maybe if you are single or don't have kids........
You're not taking account of my reason for needing private cover, i.e. the abysmal state of the public health system.
Back to the original thread...
Two questions posed:
1. The role of government?
2. Which areas should spending be cut from?
Answer to Q1:
The only role is the enforcement of contract. All others should be done by private enterprise.
Answer to Q2:
Firstly guys - do your homework. Get a copy of the government accounts (all levels of government accounts are available). Sheesh - call yourselves investors; Not! Fundamental research for any company - check their financials. Apply 80/20 rule. Where does 80% of government spending go? Easy answer looking at the accounts: WELFARE.
So simple answer to Q2: get rid of ALL welfare. Make people responsible. Make the family worthwhile again. All these handouts only break families apart. No government is "family" friendly. Add to that the removal of child support and spousal maintenance. Cuts down the divorce rate drastically. You want to have kids girls - weigh up the consequences first. No support from the government and none from the father unless you have a proper contract (prenup/Binding Financial Agreement) in place (see answer to Q1) and for goodness sakes women get financially educated and financially independent. And before the bleeding hearts go on about the poor old ladies - go back and consider why their families are not supporting them. Again make the family responsible - not the state. I don't want my income supporting your old granny. Look after your own. And the poor... Do some historical research before you whine about them. Government usurped the role of looking after the truly poor about 80 years ago. Killed an entire industry.
Bottom line get the government out of your life. Vote for "NONE OF THE ABOVE".
Unfortunately we live in a society full of bleeding hearts and meddlers who just love to tell us how we should live our lives. Government is a direct expression of those meddlers and special interest groups.
Back to the original thread...
Two questions posed:
1. The role of government?
2. Which areas should spending be cut from?
Answer to Q1:
The only role is the enforcement of contract. All others should be done by private enterprise.
Answer to Q2:
Firstly guys - do your homework. Get a copy of the government accounts (all levels of government accounts are available). Sheesh - call yourselves investors; Not! Fundamental research for any company - check their financials. Apply 80/20 rule. Where does 80% of government spending go? Easy answer looking at the accounts: WELFARE.
So simple answer to Q2: get rid of ALL welfare. Make people responsible. Make the family worthwhile again. All these handouts only break families apart. No government is "family" friendly. Add to that the removal of child support and spousal maintenance. Cuts down the divorce rate drastically. You want to have kids girls - weigh up the consequences first. No support from the government and none from the father unless you have a proper contract (prenup/Binding Financial Agreement) in place (see answer to Q1) and for goodness sakes women get financially educated and financially independent. And before the bleeding hearts go on about the poor old ladies - go back and consider why their families are not supporting them. Again make the family responsible - not the state. I don't want my income supporting your old granny. Look after your own. And the poor... Do some historical research before you whine about them. Government usurped the role of looking after the truly poor about 80 years ago. Killed an entire industry.
Bottom line get the government out of your life. Vote for "NONE OF THE ABOVE".
Unfortunately we live in a society full of bleeding hearts and meddlers who just love to tell us how we should live our lives. Government is a direct expression of those meddlers and special interest groups.
Back to the original thread...
So simple answer to Q2: get rid of ALL welfare. Make people responsible. Make the family worthwhile again. All these handouts only break families apart. No government is "family" friendly. Add to that the removal of child support and spousal maintenance. Cuts down the divorce rate drastically. You want to have kids girls - weigh up the consequences first.
Why stop with one...Lakemac,
Australia should go towards a user pays system. and let the government spend their time and money on the big picture stuff. (defence, infursturcture etc).
Also we could possibly get rid of one tier of governmet.
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