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Byron Shire
April 16, 2021

Thus Spake Mungo: healthcare

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The private health industry, we were told last week, is ‘a muddled healthcare system that is riddled with inconsistencies and perverse initiatives,’ as Stephen Duckett put it in a report from the Grattan Institute.

Indeed, and things are now reaching a crisis point. But it was hardly unexpected. The private funds have effectively been on notice for fifty years, since the time of the moon landing.

It was 1969 when Gough Whitlam embarked on his first election campaign as leader, and the centrepiece was a promise of universal health insurance – Medibank, which later became Medicare.

It was hardly a revolutionary idea; the Poms had embraced their National Health Service for many decades. But for Australia it was a major change, and one that promptly induced panicked opposition from the private enterprisers who had held the territory since it was bequeathed to them shortly after World War II.

It was Earle Page, Robert Menzies’s former enemy now redeemed as his Health Minister, who set up the scheme. Page was utterly against public enterprise in any form; in his youth, he had campaigned against the establishment of public hospitals, which, he insisted, was unfair competition for private hospitals – of which he just happened to own several.

The big boys, the Medicare Benefits Fund and the Hospital Contributions Fund, called themselves non-profit, but accumulated vast investments and reserves

He lost that fight, but won the next: the private funds were established, and became, in effect, compulsory. Those who wished to defray their rising medial bills had no alternative except to sign up. The big boys, the Medicare Benefits Fund and the Hospital Contributions Fund, called themselves non-profit, but accumulated vast investments and reserves; Whitlam used to jibe that they appeared to be preparing for a recurrence of the Black Death.

He narrowly lost the election of 1969, to the great relief of the fund managers. But he won in 1972, and all hell broke loose. As well as the funds, most of the medical profession was implacably opposed to what Page had described as ‘the socialisation of medicine.’

Whitlam’s minster, Bill Hayden, had his Social Security portfolio reduced to the SS and was equated with the Nazi Gestapo in tracts and caricatures.

The coalition resisted Medibank for another three years, until Whitlam eventually forced it through after a double dissolution. And when he was dismissed, Malcolm Fraser promptly attempted to dismantle the fledgling reform. But Bob Hawke refurbished it, and in spite of some recalcitrance from John Howard and later Tony Abbott, Medicare became a fait accompli, embraced by the electorate.

As a result, private insurance became optional for the masses, and the membership of the private funds began its inevitable decline. Even the doctors dropped their resistance when they realised that socialised medicine could actually be something of a bonanza: their base income was guaranteed, and they could still raise their fees to any level they wished.

With conservative governments committed to their cause, the public was induced by a combination of carrots and sticks to keep the funds viable

And many did, which meant that many of the seriously or chronically ill still found at least some form of private cover worthwhile. And with conservative governments committed to their cause, the public was induced by a combination of carrots and sticks to keep the funds viable.

And some funds began to experiment with bells and whistles, some worthwhile, like dental insurance, and others not, like refunds for homeopathy.

But equally, the younger and fitter could see little point: the ideological buster about getting ‘your doctor of choice’ when going to hospital was small compensation for the inevitable bills, and more so in an emergency when you didn’t have a choice of doctor anyway.

And as the young dropped out of the funds, the effective subsidies that propped up the increasing needs of an ageing population started to become highly problematic. Fees went up – well over the the rate of inflation. And once wage stagnation set in, so did the rot. Which is where we are today.

So the government is in a real bind. It can provide further relief to keep the funds alive, but not only is there a growing realisation that throwing more money into a decaying system is basically counter-productive (not to mention a fine example of socialisation); it is now clear that it is vastly inefficient. Using the resources to improve and enhance the public system – Medicare – would be far more productive, not to mention considerably fairer.

The government will start by denying that there is a crisis, and will then say it is all Labor’s fault, and go on to demand that someone else – the states, the profession itself, anyone – fix it

But the government, being the government, is unlikely to embrace such rationality. It will start by denying that there is a crisis, and will then say it is all Labor’s fault, and go on to demand that someone else – the states, the profession itself, anyone – fix it. And then, when the crunch comes, it will handover another swag of taxpayers money, declare victory and leave – until the next crisis.

The sensible approach would be simply to scrap all the subsidies, incentives and rebates and make private insurance truly voluntary – a matter of choice for those who can afford it. And then, if necessary, bump up the Medicare levy to whatever extent is needed to provide the universal health care that was promised and intended all those years ago.

As Duckett remarks succinctly: ‘the question then becomes whether government should support private health care directly, or via public

heath insurance – or not at all.’ It is not yet a question the government is willing to contemplate. But the way things are going it will soon have to confront reality.

Scott Morrison and his new Health Minister Greg Hunt have come around, probably reluctantly, to the idea that Medicare is too popular to abolish

Scott Morrison and his new Health Minister Greg Hunt have come around, probably reluctantly, to the idea that Medicare is too popular to abolish – even if tinkering with it is highly risky; remember Bill Shorten’s Mediscare campaign. But the same is no longer true of the private funds – if it ever was.

Thus the government is caught in a conflict of disloyalties. Morrison and all his colleagues swear, on what passes for their hearts, that they are utterly devoted and committed to Medicare. But their real love is the free market. In an ideal world, they would cleave to Earle Page and private oligopoly, no matter how much it had to be regulated and propped up by public money.

But alas, those easy options have passed. And this time more tinkering will not be enough. The funds are getting very close to their use-by date.

As Whitlam himself might say, it’s time.


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12 COMMENTS

  1. In this fast repulsive uncertain world and you put your pulse and heart out into the speeding flowing traffic, the Grattan Institute’s Stephen Ducket Report tells us that the private health industry is ‘a muddled healthcare system that is riddled with inconsistencies and perverse initiatives.’
    No wonder we feel run down when the private health industry is the big lumbering vehicle that which we have to deal with when we are treading the highway of our life.

  2. Good to read about the current crisis set against its historical origins.

    I love reading Mungo’s articles because he has the ability to put current events in a broader context so succinctly.

    However, with this government there’s no likelihood of a lasting fix for the problem.

  3. To my mind, not that this is neceasarily the only issue, is the gouging by corporatised healthcare providers and medical practitioners. The question rarely asked is “where does all of the health funding actually end up?”. I recall my now late-mother needing to see a heart specialist twice a year and being forced to pay a $200 gap out of her meagre pension. Now, assuming that specialist saw 20 patients per day (these guys tend to have a production line mentality – no chit-chat – get them in and get them out), that is $4,000 per day from his gap alone, let alone what he makes out of the funded part of his fee!!

    Insurance, which is in effect a subsidy, tends only to drive prices up, especially in a market where the service providers can, as Mungo notes, detemine their own incomes. In those instances, the value of the subsidies gets surreptitiously added to the price – the same happened to sollar panels in the early days – when the subsidies started to be scaled back, prices dropped dramatically. People don’t really notice insured costs, until the health funds really start increasing their premiums, because the “subsidies” tend to disguise the real costs of a service, so it is not something people pay much attention to. I will be pleased (or disappointed!) if somone can cite for me an example of any service where the profits are privatised but the risks and the costs nationalised where there is not rampant gouging.

    I am not advocating doctors can’t earn an income commensurate with their status, but it seems to me that doctor and health corporate incomes, including providers and insurers) and profits are increasing and all the while patient outcomes are in decline. This tells me that aside from inefficiencies in the system, there are simply too many people using the health system to make themselves wealthy.

  4. Whitlam’s (or Hayden’s) Medibank was a watered down version of the UK’s NHS.
    Further watered down by Hawke, renamed Medicare and in conjunction with Medibank Private.
    Medibank Private sold, Medicare to go?

  5. Mungo, as usual a pithy article.

    I (as an old Socialist as in Humanist) have long had the view that the current system is inefficient, not so far as the Hospitals, hard working doctors & other medical support staff including Allied Health, but from the propped up inefficient Health funds that are virtually all now privatised.
    My long time thoughts have been that Medicare should fund any Australian citizen for cost free medical & hospital care that is based on the cost for a patient in a Public Hospital. This care is portable, & can be used in a private facility, but any cost difference must be paid by the patient (or insurance or benefit fund). It would be personal choice if one merely used Medicare, or had some form of cover & had a doctor/Specialist or Hospital of choice covered by that insurance for the difference in cost, or was personally paid.
    The main difference with my idea is that the universal health care re-imbursement is portable, so one would not be double-insuring as I feel currently happens. I also think Dental should move into the Public system in a similar way. (There are enough Public Dental clinics to be able to assess a reasonable cost) Ambulances should also be moved into the Medicare system (including the Flying Doctor service & other health-related movements).
    The difference with my suggestion is that any additional insurance would not be Tax-deductible. This saving would part-fund the changes. Perhaps the Medicare system could also be moved into the Constitution to stop a future government defunding the system….

    I look now & realise how lucky we Australians are to have our (currently severely depleted) Medicare system. Can one imagine anything like Medicare being passed now- even if we had a Labor government? Of course there need to be changes, but I feel we need to all be covered by that universal, Intermediate Health cover. Let the Dinosaur Health funds adapt or wither on the vine. We need to be very careful we do not let any Australian government move us towards a highly inefficient US style Health system (which actually costs the US Government MORE per patient than our Medicare system)

    Stepping down off Soap box (for the younger, a wooden box that originally contained soap, but often used as a plinth for public speaking in ancient times as in pre-internet, particularly in the Domain, Sydney)

  6. Beep! Beep! The old Road Runner cartoon. Seems like
    everything is ‘Blowing in the Wind’ & there’s little we can
    do about it – /’;=?+!#. I heard a voice… a woman’s voice
    of reason. “Don’t make me come on down there …..”
    Answer… ‘please do’. [We tried, Mungo. We tried.]

  7. No problems really. Smokers and drinkers pay for the whole system, always have, the lobby groups make sure of it. Now we’re towards encouraging illegal drugs. Not a problem really. Legalise all drugs and tax the shite out of it. Including the rich’s preferred hit, cocaine. And drop all the halfway houses, the subsidised rehabilitation centres and groups. Let the rich fly to California and for the hooked, pass out the nembutal. Really quite simple.

  8. Dear Mungo
    Thank you for such clear and concise information and historical analysis.
    We are indebted to you. Australia is indebted to you.

  9. I give to the vice bank five thou a year. Over 40 years and five million like me, thats a trill. You deduct the cost of 100mill machines that go ping, which every hospital wants, and their bureaucracy, there’s the cost of medicine. We all quit, which is advisable, and doctors will earn the same as domestic cleaners.

  10. Charges… I’m sick of Heart, Eye & Neurologist
    Specialists all at a couple of times a year along
    with having paid for ‘private health cover’ for
    years. Don’t mention ‘dentists’ either… $1,000
    for 2 fillings? They’re not even digging for
    gold… all they do is hold out an empty palm &
    wait for me to fill it. EXTORTION.

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