According to a report commissioned by the Independent Hospital Pricing Authority, hospital services have increasingly become funded by private insurers in recent years. In NSW, as much as 20% of public hospital services are being paid for by insurance companies, while the national average is 14%.
Public hospitals, desperate for funding, are incentivised to pursue revenue from private insurance companies, by encouraging patients with private cover to bill their insurers while staying. There is a growing concern that public hospitals are preferencing patients with private insurance over patients reliant on the public system. Additionally, there is worry that this could result in an increase of waiting times for patients in the already neglected public system.
Health insurance companies are up in arms over the news, furious that they are being forced to pay for expenses that have previously come out of the public purse. The right-wing media has used the report as an excuse to continue their ideologically driven campaign against Medicare, insisting that a ‘user pays’ system must be introduced in a more widespread way.
Michael Roff, the Australian Private Hospitals Chief Executive, has claimed that public hospitals are “driving up the cost of health insurance premiums, with funds paying more than $1 billion a year to public hospitals for patients to receive services that they are entitled to receive free of care under the Medicare hospital system”.
Barely mentioned however, is that health insurance premiums were already high, with Australians spending some $21 billion a year on them! The so-called ‘gap’, the out of pocket costs of healthcare not covered by either Medicare or private insurance, is similarly expensive and this is forcing some patients with private cover to use the public system. Out of pocket expenses actually account for some 20% of all health spending in Australia. In the United Kingdom for comparison they account for only 10%.
There is abundant research that shows that out of pocket expenses are a major contributor to people not seeking treatment or purchasing prescription drugs. An Australian study from 2016 concluded that out of pocket costs were a significant barrier to healthcare for people with mental health conditions, and even cancer patients.
Another idea floated by right-wing commentators is to allow private insurers increased cover of out of hospital (outpatient) care, including GP’s. Health insurance companies have dreamed of this for many years as this would open up another sector to profiteering, and undermine the practice of bulk billing.
Foundation Director of the Centre for Health Economics, Jeff Richardson, argued in 2014 that “One of the reasons we’ve managed to keep GP fees very low… is that bulk billing has been a very effective technique for competition to prevent [doctors] from raising fees. If we let the private sector in… we’re really taking the lid off the can.”
While Australia once had a mostly free and accessible healthcare system, there is no doubt that it is being eroded and the increasing reach of the private sector is steering us towards a US styled system. Already the encroachment of the private sector had led to pain and misery for working class people. To turn the situation around a bold approach to providing an alternative is necessary.
The first step to ensuring healthcare is accessible to all is bring the entire sector into public ownership. Healthcare should be seen as an essential service rather than a profit-making enterprise. In addition to hospitals and health services, the pharmaceutical industry should also be in public hands. This would allow us to put an end to the unnecessary high cost of prescription drugs.
By removing the profit motive, and utilising all of the sectors resources, we could not only cover the existing costs but also expand the system and include services like mental health and dental care. All medical care must be free at point of service, with no out of pocket expenses!
Only these measures can create a truly universal healthcare system and eliminate the problems caused by private healthcare and an under-resourced public system. As was the case when public healthcare was first won across Australia in the early 1970s, working class people will need to mobilise and fight to make this a reality.
By Dane Letcher