Are we gambling with Medicare?

The missing and obvious response to the ‘Mediscare’ campaign last month should have been: “Privatise what”?  It would have been instructive to have the Opposition and others describe exactly what constituted this apparently saleable edifice.

It’s possible that Australians believe Medicare resembles the UK or NZ health systems where most doctors are effectively employees of the public payer, so the service provision would be on the block.

In reality, the tension which continually inflates the price of Australian healthcare is that we have combined a predominantly private supply with a public finance source.  Somewhat risibly, we describe Medicare as a ‘social insurance’.  But the essence of an insurance is that it is priced to manage risk.  Medicare is an uncapped and loosely guarded pot of money.

The Government does set the base price of medical services (the MBS rebate).  But this is increasingly unrelated to the retail price of medicine, which is affected by alternative AMA and College schedules, as well as the market power of individual specialties and specialists.

There’s nothing inherently offensive about a market price for medical services.  What would be offensive is if we granted access to essential and urgent medicine according to wealth.

And yet, that’s the gamble we’re currently taking.  If Medicare continues to be the Shibboleth of access to the Treasury Bench, then continual growth in the tax base is also required or substantial cuts elsewhere.

Neither seems likely, so where does that leave us?  The most fertile options lie with better alignment: we might more steeply means-test the need for health subsidies to ensure the social welfare goals of the system remain paramount; and/or we might explore more extensive private finance options that introduce authentic insurances to the health system in place of the current model.

Evaluate will be working extensively on the issue of matching private finance to private services, and public finance to public goods.  We’re interested in your thoughts.

By Alastair Furnival and Catherine McGovern