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health insurance « Previous | |Next »
April 28, 2006

This week's announcement of the sale of Medibank Private by Nick Minchin, the Finance Minister, did not tell us much that we didn't already know. It will be a trade sale or a public float, most likely a trade sale. The sale was bound to happen, given the anomaly of the government owning a private health insurer and being a regulator of the health industry.

However, it does not represent much of a reform step to a healthier Australia, does it? Is that why it was dressed up with the expansion of hospital cover to cover outpatient and out-of-hospital services, chronic care management for conditions such as diabetes and asthma, and insurers being able to cover disease prevention measures.

Contrary to the claims by Tony Abbott, the Health Minister, I cannot see that this sale will prevent health insurance premiums continuing to rise by more than inflation. Whilst inflation is around 3% per annum, health insurance premiums increases range from 5.7--7.4%. How does the sale represent increased consumer choice?

What is not generally mentioned in this is that for every additional dollar of premium that health funds collect 30cents is paid by the government in the form of private health insurance rebate. That rebate is designed to encourage the trend to private health insurance cover.

In an entry for 2004 in the Latham Diaries Mark Latham states the ALP's opposition to the private health insurance rebate:

A good meeting this morning with Gillard's health experts, Stephen Duckett and Hal Swerissen. We have worked out a way of dealing with the despised private health insurance rebate. We need to kill it slowly; adopt the strategy Howard and Woolridge used for their attack on Medicare, dismantling it slice by slice. (p. 267)

Why would you slice it bit by bit?

Well, since the rebate applies to everyone it works to favour those who can afford to take private health insurance--those high income households who would have taken out private health insurance anyway, if there was no rebate. The other side of the picture is that the uninsured on low incomes are disadvantaged: they have to pay taxes from which the rebate is paid, face a reduced level of services at underfunded public hospitals.

| Posted by Gary Sauer-Thompson at 5:13 PM | | Comments (4)


Can anyone name one privatisation of state assets that resulted in a better deal for consumers? I can't.


how about Quantas?

The creation of JetStar, the budget airline. Cheap airfares enable Australians to fly to Broome, the Gold Coast or Tasmania.

Oops, forgot about Qantas. But I'm not sure that privatisation per se is responsible for the lower fares.

Privatisation per se is not responsible for the lower fares. That comes from competition, doesn't it.

However, privatisation gave Quantas the flexibility to be able to respond to competition through the creation of a budget carrier.