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Medicare « Previous | |Next »
November 19, 2003

Judging from news reports it would seem that the Howard Government is willing to spend big enough on public health (from $917 million to $2.4 billion) to neuter health as an election issue favouring the ALP. By all accounts the revamped package (dubbed MedicarePlus) has enough goodies (paying GPs an extra $5 to bulk-bill children; more doctors and nurses) and concessions (an expanded safety net for low and middle income families) to ensure that it will pass the Senate within weeks.

Health was a key negative issue for the Howard government with voters in the lead-up to the federal election. It has been addressed with buckets of money replacing the old modus operandi of bashing the Senate for its wilful obstruction has been quietly dropped.

Much of the Package will go through the Senate under ministerial regulation rather than legislation. Louise Dodson explains the strategy:

'By using regulation to get key parts of the package through the Senate, the Government has made it difficult for opposition parties to influence the new package because they will be presented with a "yes" or "no" choice on topics such as incentives for doctors to bulk-bill children of low-income families. The strategy does not give them the chance to propose amendments. Saying "no" to many of the proposed changes would be political suicide.'

Despite the modest investment MedicarePlus is a political winner as it leaves the Opposition Labor Party with little room to move.

And so the federal election has begun. Medicare is safe with the Howard Government is the political message.

Given that the incentives for doctors to bulk-bill are restricted to welfare recipients and children, the MedicarePlus package continues the trend towards a two-tiered health system: private health for the rich and public health for the poor. We already have a two tiered health system where wealth does buy better access and the user-pays principle that is replacing bulkbilling.

The long-term strategy of the Howard government is to push as much of health care spending off the federal budget----shifting to private health insurance. That is the right and proper policy intones the editorial in the today's Australian Financial Review (subscription required, 19 11 03, p. 70). The Howard Government is making the shift through a policy of eroding Medicare through shifting costs to patients. It does this in MedicarePlus by refusing to put public money into bulk billing for all citizens and by targeting concessions to specific groups. For the spin on this see Chris Sheils' Back Pages.

It is also doing little to reform the market for health-care services.

| Posted by Gary Sauer-Thompson at 10:54 AM | | Comments (7)


it's the typical honest John strategy - dimsantle by stealth. but if you do the sums, hardly any get the concessions anyway.

i'd like to see him *really* privatize health insurance instead of propping it up with public monies and see how well that will go down with a spoonful of sugar

John Howard doesn't have to dismantle programmes like Medicare or the PBS scheme by stealth. It happens by natural attrition in a reverse case scenario like bracket creep, where more PAYG taxpayers pay higher marginal tax rates.

If you don't believe me, believe Finance Minister Nick Minchin who recently commented on a 10% blowout in costs of the PBS scheme last that if costs rise at that rate, within 13 yrs the scheme will gobble up more resources than the total spend on education.(and that doesn't even take account of exponentially increasing demands from an aging popn.) We should expect the same withering away of things like Medicare, particularly with exogenous shocks like medicos liability insurance.

If you think Labor is the answer to all of this then you're going to have to see them stand on a platform of dramatically increased taxation, with a view to protecting the universality of such schemes from rising costs. Failing that, you may as well vote for John on economic management grounds and expect to shoulder more of the burden privately. Of course you may have other objections to John, which prevent you from taking up this broadly accepted, pragmatic offer. You certainly do not have any serious, alternative option on offer at present.

Can I also point out that with the luxury of a $7.5billion surplus, largely due to a tax on services via the GST, you should be thankful John is in a position to offer some relief on Medicare. But perhaps with a total net GST take of about $30billion you would prefer to rollback the GST to about 7.5% and have no increased spending on Medicare? Would that sort of trade-off satisfy your sweet tooth?


Why introduce rollback of the GST into the discussion?

The GST was about providing an growing income stream for the state and easing the tax burden of individual taxpayers.

The issue is about how that money from the GST is to be spent. Why shoud we just accept that the money should be spend on defence and not health. Why accept that it is to be spend on subsidising a private heath industry and not on bulk billing.

Why accept the assumption that health is not a public good that should be paid for out of general revenue?

Why should we accept the principle of userpayers for sick people?

I guess there are a couple of points that I was making here. Firstly that we have to understand that Govts often have to govern in response to events and inexorable forces beyond their control. ie demands of aging populations or rises in liability insurance. This is the reactive side of Govt. We should always be careful that our biases do not blame Govts for these things beyond their control.

On the other hand we should be prepared to give credit where credit is due, when we see proactive courage in Govt policy. I would suggest the GST is one such example. The Howard Govt stuck its neck on the block for that, against much opposition and hyperbole. It also had to face the unpalatable truth that no Govt that had introduced a VAT type tax, was returned at the next election. The benefits of a VAT type tax in overcoming the increasingly problematic WST were well recognised even by Keating. He of course lacked courage on this issue, unlike Howard(although Keating showed courage with freeing up the dollar,etc against his own idealogical constituency)

The benefits of a GST should now be apparent to all(on top of the Hawke/Keating reforms)An improvement in equity has occurred through the taxation of services rather than just goods under the WST. As well incentive was enhanced by ameliorating high marginal tax rates, while the efficiency benefits(particularly to exporters) I believe, have been demonstrated by Australia's relative economic performance since.

So we should recognize and applaud good Govt action when we see it and not be blinded by our bias against such Govts for other perceived shortcomings. As a result of this act of good Govt, Labor can now be free to offer the electorate their ideas on how best to spend the fruits of the GST. I guess I did not sense any such magnanimity in Saint's comment.

He should understand that if you want to spend publicly, you have to be prepared to raise the taxes to do it. Our politicians face a plethora of rattling buckets around the cow of Govt, but very little enthusiasm to get up early in the morning to help with the milking.

observa - thanks for your thoughts. just a note: you have assumed/read more into my comments than what was really there.

Fair enough.