Tuesday, July 16, 2019

Today by Paddy Manning

“Death spiral”
Who is private health insurance helping, exactly?

Health Minister Greg Hunt. Source: Twitter

Today’s Grattan Institute working paper on private health insurance deliberately poses many questions and avoids answering them, because it is the first of a series. But there is enough background information here to confirm what many people suspect already: with private health insurance premiums rising 30 per cent in real terms in less than a decade, and 84 per cent of policies now incorporating exclusions or excesses, this is a dud product that deserves to go into “a death spiral”.

Everyone knows someone who’s had a claim rejected based on fine print, and only last week Guardian Australia revealed that the country’s biggest private insurers had systematically and illegally rejected thousands of claims based on pre-existing conditions without seeking a doctor’s opinion. Equally important, what are taxpayers getting for the $6.5 billion and rising that is spent annually on the private health insurance rebate? Going by the Grattan Institute’s paper, the value proposition here is marginal at best.

The paper, by Stephen Duckett and Kristina Nemet, charts the decline of private health insurance cover from the introduction of Medicare, when it covered 80 per cent of the population, to 30 per cent by the mid ’90s, when then prime minister John Howard introduced a range of incentives and penalties, including the private health insurance rebate and the Medicare Levy Surcharge. That stabilised coverage at 40–50 per cent, but recently it’s been dropping again, particularly among the young. The reason for this is made obvious in the report: premiums have risen by 30 per cent since 2010–11 in real terms, way outstripping both health expenditure and wage growth.

Duckett and Nemet write that the purpose of private health insurance is unclear – is it to complement the public system, substitute for it, or do a bit of both? – but perhaps the most damning lines question the value for money that taxpayers get by subsidising the profits of the insurers with the billions of dollars in rebates. At best, the authors write, subsidising private cover might be justified if it reduces the net cost of healthcare to government. “Even if the overall service is less efficient, and costs more, the costs to government might be lower if individuals are prepared to pay more for some of the care that would otherwise be publicly funded … because they are bundled with services that complement the health care in the public system.” Pretty tenuous, but that’s the best argument for $6.5 billion in public expenditure on the rebate.

That argument is undermined later, however, when the authors indicate how little hard evidence there is to support it, with data showing that private hospitals tend to provide less-complicated surgical procedures: “It is unclear how much of the additional activity in private health care is due to the unmet needs of patients in public hospitals and how much is the result of medical specialist-induced demand, based on patients ability to pay rather than their clinical needs. Some of the additional activity funded by [private health insurance] may not improve patient outcomes…” [emphasis added].

The report quotes Tony Abbott as Opposition leader in 2012 saying that private health insurance is in the Coalition’s DNA, and says that the Coalition’s rhetoric since 2013 has been that Medicare is unsustainable and should be a safety net provider, with more Australians taking out private cover. Health Minister Greg Hunt today resisted Labor’s call for a Productivity Commission inquiry, saying in a typical bit of hyperbole that the government was “already delivering the most significant reforms to health insurance in more than a decade”. Shadow health minister Chris Bowen today said, “I don’t think anybody’s proposing getting rid of the private health insurance subsidies. Certainly we weren’t proposing that at the election and certainly we’re not proposing that now.” But Bowen is wrong about that: the Greens propose to axe the private health insurance rebate altogether, and redirect the billions to the public health system. That would be a better use of taxpayers’ money than subsidising the profits of private health insurers who provide patchy coverage at a skyrocketing price.

“This isn’t about playing politics, this is a genuine request. This is a national problem.”

Victorian premier Daniel Andrews announces a $600 million package to replace flammable cladding, and asks the Commonwealth to contribute half the cost.

“I can understand [the] proponents of the Carmichael mine, their frustration. I mean, they were made to jump through more environmental hoops than perhaps any previous project in the nation, and, no doubt, they wanted to determine that … those arguing against their proposals were not just some sort of quasi anti-development groups or individuals.”

Deputy Prime Minister Michael McCormack defends Adani after the ABC revealed the mining company asked for the names of CSIRO scientists reviewing its groundwater management plans for the Carmichael coalmine.

The truth about small government
Scott Morrison’s signature achievement could be the tax cuts he legislated earlier this month – although not for the reasons he believes. Mike Seccombe on the truth about small government.

The value of an Australian defence contract awarded to US firm Lock N Climb, which has been blacklisted for corruption and bribery, according to a Guardian Australia investigation.

“UTS at this stage has no plans for new work with CETC and will assess the current contractual agreements in light of the review.”

From a statement to ABC TV’s Four Corners, which revealed that University of Technology Sydney is reviewing its $10 million partnership with CETC, a Chinese state-owned military tech company that developed an app that Chinese security forces use to track and detain Muslim Uyghur citizens in Xinjiang. Curtin University is also reviewing its research approval procedures after the program revealed that an academic at the university has been involved in developing methods to better identify ethnic minorities in China using artificial intelligence.

The list

“Fifty years ago this month, Neil Armstrong took his ‘small step’ onto the Moon. In the anniversary hullaballoo, there’s been nostalgia for the heroics of the Apollo 11 astronauts, as well as eager anticipation of a new golden age of space commercialisation, as governments across the world hand over the keys to the cosmos to private enterprise.”

“In jurisdictions where the theft of single cigarettes sometimes results in jail time, judges, prosecutors, editors and politicians have co-ordinated to keep the wealthy, powerful and connected free from accountability.”

“Contrary to what we have been led to believe, there is evidence in Australia and internationally that private health care leads to increased health costs (by abolishing centralised cost controls) and to longer waiting times for public surgery, particularly urgent surgery: partly because public hospitals have to compete for staff, and doctors can earn far more in a private hospital, and partly due to ‘over-servicing’ willing customers.”

Paddy Manning

Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is the author of Inside the Greens and the unauthorised biography of Malcolm Turnbull, Born To Rule?


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