Thursday, April 19, 2012

Hockeynomics: Cut medicare, subsidise private health, save money

Shadow Treasurer, Joe Hockey, has attacked the "culture of entitlement" that has supposedly stemmed from Australia's welfare state - citing examples of our Asian neighbours as a yardstick by which to judge effective government spending on welfare.

An excellent analysis of Hockey's argument by Matt Cowgill shows that, in fact, Australia's welfare spend on areas other than health and ageing, is comparable to our Asian neighbours. It also compares strongly to other Western countries, including the US.

Cowgill's conclusion is that the only place in which welfare can effectively be cut is in either Health or Ageing:
"To achieve the sort of cuts that Hockey has flagged, to bring our social spending into line with Korea and other countries in our region, would involve huge cuts to health spending, pensions, aged care and help for people with disabilities."
However, there is no need to go into a depth of analysis to see that this is precisely what the coalition intends to do with its cuts to welfare.

In an interview with Lateline, in answer to a question on the Private Health Insurance Rebate, Hockey outlines a move to the US-style system of health care: heavily subsidised private providers providing the bulk of care, with a minor role for a public safety net. Hockey said (emphasis mine):
"If you reduce or remove the Private Health Insurance Rebate, you are simply pushing more people onto the public hospital system, which means they have an entitlement to universal health care, which means that the entitlement system grows."
Hockey is suggesting that an entitlement to universal health care is a bad thing and it is more effective to dismantle the universal system for a system of government subsidy to the private sector.
Hockey goes on further to say: "some entitlements [the Private Health Insurance Rebate] work to reduce other entitlements."
So, according to Hockey, the use of the Private Health Insurance Rebate - a subsidy to the private sector, will reduce the entitlement to universal health care [ie. Medicare].  The shifting of subsidies to the private sector and the dismantling of Medicare's universality smacks heavily of the current US system. In this system the publicly funded system is only available to certain classes of citizen with many falling between the cracks of subsidised private health insurance and the public scheme.

So how does this system compare for cost savings? According to the OECD the US health system costs 7.2% GDP compared to the Australian system which costs 5.7%. In terms of life expectancy, the US ranks 38th in the world, compared to Australia's rank of 6th. There appears to be little gained in the way of cost savings or better health outcomes.

Hockey has given us a glimpse of what a Coalition government would do to fund it's $70 billion in promises - Medicare's universality is to be dismantled, and not for cost but for an ideological antipathy to Medicare that has festered in the Coalition since Malcom Fraser first opposed it.

No comments:

Post a Comment

You know the drill. Play nice.