THE DISPUTE about the effects of declining private health insurance and the allegedly jumping of queues for treatment in public hospitals has produced a remarkable outbreak of muddled thinking.
Falling numbers of insured may come mainly from younger age groups who presently make less demands on hospital services, but it beggars belief to deny any substantive link between falling insured and the rapidly increasing call on taxpayers to fund free services, as reflected in the estimated 22 per cent increase in admissions of public patients to public hospitals between 1989-90 and 1992-93. And it is just as fallacious to suggest that the treatment in public hospitals of patients prepared to pay deprives public patients of treatment.
In reality, queues for free services in public hospitals do not reflect any lack of beds. The Commonwealth's National Health Strategy of August 1991 stated that improving treatment methods mean that "there may be a need for as few as 3.3 beds per 1000 population by 2001". This target national standard is well above Victoria's current ratio of 4.5 beds per 1000 population. In the next few years some additional public hospitals will be closed.
The queues arise because Commonwealth and state governments' funding for public hospitals is insufficient to pay for all those seeking free services. This is scarcely surprising: if a service is free there is bound to be a high demand -- and bound to be a justifiable limit on taxpayer contributions.
If charging is not used as a rationing device, waiting lists are inevitable. Even with the improved productivity of Victoria's public hospitals under the case-mix system, and the resultant dramatic drop in public waiting lists, queues for free treatment are most unlikely to disappear.
It is common sense, therefore, for public hospitals to use surplus beds to treat patients prepared to pay. As public hospitals usually more than cover running costs on services they sell to private patients, this reduces the net cost of free services. Moreover, public bed patients benefit from having senior specialists on site more often and then available to treat such patients.
Private patients in public hospitals generally have the alternative of a private hospital. Thus, if the public hospitals were now to restrict services only to public patients, private hospitals would expand services to meet the demand.
It is not correct therefore that private patients in public hospitals are "jumping the queue". On the contrary, if someone on the free waiting list for a public bed pays for private bed treatment that allows others to move up the queue.
There is other nonsense promulgated both inside and outside the medical profession about health services and their funding.
One big puzzle is why there is such insistence on making services available free of charge to all. Of course, low income groups should have free treatment, as they do now. But it is absurd on both economic and equity grounds to make hospital and medical services available free to middle- and higher-income groups, except for the chronically ill.
The latter could receive a government subsidy for medical costs above a proportion of their incomes. Otherwise these income groups should meet, not a "co-payment" (as the Deputy Prime Minister, Mr Howe, proposed), but their whole bills. If they are concerned about possible large bills, they can take out insurance. Such a change would allow a substantial reduction in taxation.
Unlike her two predecessors, the new federal Health Minister, Dr Lawrence, shows little understanding of the direction in which reforms should be moving. Her stated aim of not increasing the proportion of GDP spent on health is absurd: if people decide that is how they want to spend their incomes, governments should be concerned only to ensure the health services market is competitive. Nor should she worry about "creating one health system for the poor and one for the rich": such a system exists now in the sense that those prepared to pay for hospital treatment (and they are not all "rich") already do so. And her reflex rejection of the states taking over several health services reveals a failure to understand the world-wide trend towards decentralised management.
The bipartisan agreement to maintain the present inefficient community rating system is also anomalous. A government subsidy for the chronically ill would allow desirable changes to that system (which outlaws insurance charges that vary with the risk of illness). If the chronically ill were largely insured by the taxpayer, private insurance would be at a lower average charge -- but with differential charges that encouraged preventative measures to improve health.
The health system needs a massive injection of competition. For example, the main complaint about public hospitals treating fee-paying patients should not be queue-jumping but the provision of competition for private hospitals from an unfair base. (Hitherto, their charges have not covered their capital costs: the new Victorian system of requiring provisions for capital costs will help overcome this). In the longer run the distinction between public and private hospitals should be eliminated by privatising public hospital services.
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