June 15th 2019

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Articles from this issue:

COVER STORY Anthony Albanese: NSW left factional warlord takes charge

EDITORIAL Religious freedom: the political and legislative challenges

CANBERRA OBSERVED Will Bill Shorten emerge from the shadows again?

FEDERAL ELECTION Queensland voted for jobs, life and country

NATIONAL AFFAIRS Keating's 'nutters': Don't blame the messenger

ECONOMICS AND SOCIETY Health policy is not immune from neoliberal infection

HUMAN RIGHTS Canada accepts Asia Bibi and family as refugees

FAMILY AND SOCIETY Families keeping the faith: the Benedict and other options

IDEOLOGY Feminist claims for equality, Part 1: The context

HISTORY OF SCIENCE Faith and reason and Father Stanley Jaki, Part 3: More on science and ancient cultures

LIFE ISSUES Families, youth boost crowd at WA Rally for Life

MUSIC Muse of delight: The laugh ascending

CINEMA Asterix: The Secret of the Magic Potion

BOOK REVIEW Pioneering aviator's flights and fancies

BOOK REVIEW Catholic resistance in a forgotten war

BOOK REVIEW AFA patron's long life of public service


NATIONAL AFFAIRS Cardinal Pell's appeal, June 5-6, 2019: An account from the live streaming

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Health policy is not immune from neoliberal infection

by Colin Teese

News Weekly, June 15, 2019

Is there a connection between neoliberalism and health policy? Certainly.

One of the most comforting, and fallacious, assumptions of modern life is that a desired change can be effec­ted and yet leave all our other desired outcomes undisturbed. Neoliberalism and health policy is no exception.

Without neoliberalism we had a fairly satisfactory public health system – at least for its time and place.

Going back to 1975, our system has maintained the delicate balance of private and public health care. One way or another, it managed to cover the needs of all Australians.

Public hospital treatment was, and is, still universally available. Such was its cover that, in 1985, the Treasurer of the time, Paul Keating, was able to pronounce that he, personally, saw no need for private health insurance.

Those who wanted to opt for something beyond public hospital treatment were able to take out private insurance. Respected health professionals believed that it was the best possible arrangement; though, to be fair, how one could know for certain – then or now – is unclear.

What we can certainly say is that today’s system is seriously, perhaps fatally, flawed, in terms of delivering low-cost health care.

Stephen Duckett, the director of the Health Program at the Grattan Institute (and has been head of the Commonwealth Department of Health), certainly believes so. Writing in The Australian Financial Review (April 30, 2019, “Private health cover is in a death spiral”), he outlined some of its problems.

(The Grattan Institute, a privately funded think tank loosely connected with Melbourne University, has previously published useful stuff on health matters.)

What Duckett tells us should come as no surprise. Private health insurance premiums are rising faster than inflation (so is the cost of health care, both in regard to treatment and hospitalisation).

But that is only part of the story.

Young people, the backbone of any viable health insurance scheme, are dropping out in droves, for two reasons. First, low-paid, insecure employment makes premiums unaffordable for more and more potential contributors.

Second, those able to pay are increasingly judging health insurance to be a bad investment. Especially in a society where individuals are encouraged to prefer satisfaction of personal wants ahead of community obligations.

Duckett’s numbers are chilling. Of the 20–39 age group, about 100,000 have dropped out of private health cover in the last five years. Meanwhile, the number of people covered is dropping in every age group up to 60. Beyond age 60, the numbers are rising: 360,000 in the last five years.

No insurance scheme could expect to survive this kind of shift in its support base. Take house insurance. Over our lifetimes, most of us will never need to claim heavily on insurance. That’s what makes premiums affordable.

Health insurance is different. People are living longer, and it is the older who make the heaviest calls on health insurance. My own physician has told me that, as a matter of fact, 90 per cent of all outlays on individual health care occur in the last 10 years of our lives.

Confronting these realities, successive governments have managed little than a few patchwork changes.

The changes so far introduced have been aimed at persuading more young people to join private health funds. As well, and probably unwisely, we have relaxed the so-called “community standard” rules. Previously, these rules required health funds to charge all people joining the funds the same premium, regardless of age. Now it’s possible for health funds to offer lower fees to younger joiners.

As the figures show, this is not working. The young either can’t afford to join or regard it as a bad investment. And remember, when we are talking about the young, in this context, we are including young married couples confronting all the cost pressures of buying houses and raising families.

Duckett, who is a health-care specialist, perhaps can be excused for not mentioning this latter point. Less under­standable, though, is the fact that our government has chosen to ignore it.

Duckett does, however, recognise the need for change (please, let’s not use the word “reform”). He suggests an examination by the Productivity Commission or some other appropriate agency.

I disagree. The Productivity Commission is entirely inappropriate for this role. What on earth does health care have to do with productivity? Except, perhaps, to the blinkered mind of a neoliberal economist. Don’t forget, the Productivity Commission is teeming with analysts heavily infected with the neoliberal virus.

We may confidently anticipate what they would come up with: a stronger dose of privatisation, heavier personal contributions and less government spending; all certain to make matters worse.

What is needed is to put together a group that can take the present system apart. In the process it should be possible to identify why what we have now is not delivering cost-effective health care for all who need it.

Armed with that information it should be possible to develop a new system, overlaying what we have now, but adapted to current needs and realities.

That said, it will not be easy. Much turns on selecting the right people. Yes, it should be dominated by health professionals well versed in public policy creation. But creating such a group with no vested interest in the present system will be the tricky bit.

With all this in mind, Duckett’s observations in the AFR, while helpful, are by no means all we need.

What we know from him is why those needed to keep the system alive are leaving in droves, and those who most need health insurance are joining late in life.

At the time the Whitlam government created the present system in 1975, we had a universal health-care service covering both doctor and hospital needs. Because it was coupled with privately available insurance, it had all the benefits (universal cover and a measure of choice) and none of the shortcomings (long waiting times) of the world-renowned British National Health Service. Remember that that service was once regarded as the benchmark for universal health care.

Our system broke some ground by providing for a common fee for GP appointments. One’s chosen doctor could charge more by agreement, with the addition amount payable by the patient. An adequate supply of public hospital beds was available for those who chose that form of treatment.

Private health insurance was available for anyone who wanted private hospital treatment at some additional patient cost. Initially, private hospital services were mostly offered by religious or other charitable organisations.

However, many were not so well equipped to deal with some of the more complicated medical procedures treated at the large metropolitan public hospitals.

Publicly funded hospitals were also available throughout regional Australia, though these, too, were unable to provide treatment for more complicated procedures.

What about now? Doctor/patient arrangements are not much changed, but hospital arrangements have been transformed under the influence of neoliberalism.

Available capacity at public hospitals has been run down and is unable to deal with the demand for publically funded hospitalisation. For those unable to pay for private cover, and in need of urgent medical treatment, there are long – sometimes dangerously long – waiting periods. To this extent we have retreated into something not unlike the British National Health Service.

For those able and willing to pay private health insurance, non-publicly funded hospitals are available. Unlike in earlier periods, many of these are now public companies operating for profit.

The new reality is that the public system is seriously compromised. The private health insurers are also under pressure. On the one hand, the government has more or less control of their fees; on the other hand, they are offering a service which, for some customers is too expensive, while others judge it not to be value for money. Their customer base is shrinking.

Meanwhile, for-profit hospitals, subject to no price constraint, feel able to push up prices for services to patients whose expenses are covered by private health insurance.

The private health insurers may not be perfect, but it does not help being squeezed on all sides. The business model under which they are forced to work is broken. Overall health care is suffering as a consequence.

Clearly the present arrangements are unsustainable. Nothing less than a thoroughgoing overhaul can realign them with overall patient needs.

Two alternatives immediately suggest themselves. The government should exercise some supervision over private hospital charges. This could put some downward pressure on the cost of health cover, and thereby make health insurance a more attractive option. This, however, of itself, is unlikely to encourage more young people into private health insurance.

A second possibility (perhaps a necessity) is to increase massively the treatment capacity in publicly funded and controlled hospitals. This may actually be the cheapest and best option, but neither the private health insurers, nor the private hospitals and the doctors servicing them, would like it.

To be sure, unpalatable choices are confronting our Government if it wants us to avoid ending up like the United States, with high-cost, low-value health care.

Colin Teese is a former deputy secretary of the Department of Trade.

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