Support For Tax Relief To Boost Health Insurance
The Age
Friday March 27, 1992
NEIL BATT, Executive director of the Health Benefits Council of Victoria.
FOR too long health policy in Australia has been an ideological battleground. Recent proposals before the Federal Government have included the nationalisation of the health insurance industry and the abolition of the choice of doctor. The simple and obvious solutions are avoided because of blinkered doctrinal views.
Health policy is in a mess. MediCare has provided universality of cover but has also led to previously unheard of waiting lists, deteriorating public hospital capital provision and a private health insurance industry that is on a merry-go-round of increasing charges and declining membership.
The system is sustained by mythology which needs to be dispelled to enable the obvious solutions to emerge.
Myth No. 1 The Medicare levy.
Many people believe that the compulsory 1.25 per cent levy funds Medicare. In fact, it only raises about 20 per cent of the total cost. Health is not cheap and should not appear to be so.
Myth No. 2 Health insurance.
The myth is that private health insurance is less important than the Medicare levy. The facts are otherwise. Last financial year health funds paid out more dollars to health care than the medicare levy raised. Health fund payouts totalled $3.1billion while the Medicare levy raised only $2.5billion.
Myth No. 3 Cost containment.
It is argued that one of the achievements of Medicare has been cost containment, so that, as a proportion of GDP, Australian expenditure on health has remained at about eight per cent. It is difficult to understand what is so magical about this figure other than the fact that it is halfway between the UK and US figures.
What the Commonwealth has done is to hold down its costs at the expense of other institutions and individuals. It has artificially restricted the Medicare benefits schedule so that, as a result, $600million must be paid out in out of pocket costs to meet the difference between the Medicare benefit and the actual fee. It has shifted more than $450million of its own expenditure over to the health fund system since Medicare was introduced. Some 38 per cent of the current cost of health insurance is due to the actions of government.
The central importance of private health insurance is rarely recognised. It is the foundation on which the whole edifice of quality health care stands. Without private health insurance there would be no private hospitals and no independent private health practitioners. There would be no private patients in public hospitals nor the enormous financial input that these patients make which enables the whole system to continue. Freedom of choice would be gone and quality health care at risk.
Yet the system is at risk because of the impositions of governments which have driven up the costs and put private health funds on a merry-go-round from which they cannot escape. As costs increase, those who believe they are healthy enough to take the risk of being uninsured drop out. Those who are likely to be the heavy users stay in and hence the costs go up and hence _ and so on.
THE Government appears to have been content to stand by and allow the whole system to be at risk. And that is in spite of the views of the people.
The Australian Health Insurance Association recently carried out a survey in the electorate of Wills asking three main questions _ whether people believed those who took out health insurance should be assisted via tax rebates; whether this would increase insurance levels; and whether they wanted a competitive environment or a Government monopoly.
This is how they voted: An overwhelming majority (77 per cent) of those surveyed believed strongly that people who take out private health insurance should receive a tax rebate.
An even larger proportion (92 per cent) of those surveyed said they believed there would be an increase in the numbers privately insured if a tax rebate was provided.
Tax incentives seemed highly favored by those currently uninsured _ with 89 per cent believing a tax break would encourage a greater take-up of private health insurance.
Almost three-quarters of the electors surveyed showed a very strong preference for retention of the existing competitive health insurance market.
Support for the private funds carried across all political parties, all age groups and was significently high among people who are currently uninsured.
Why not a carrot and a stick?
SIX hundred thousand people on low incomes struggle without taxation relief to maintain their own health insurance. Twenty five per cent of those who earn more than one thousand dollars a week pay nothing into the system but rely on the Government thus displacing from public hospital beds those who are not able to provide for themselves. The public hospitals have queues. The private hospitals have surplus capacity.
It would be sensible to put doctrine aside and for Australia to have a bipartisan policy which gives tax relief to those who help themselves and a tax penalty to encourage those who can afford it to take our health insurance. I am not aware of any other solution.
© 1992 The Age
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