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Medicare Select « Previous | |Next »
December 9, 2009

In its final report to Government, the National Health and Hospitals Reform Commission introduced the idea of Medicare Select. It represents the introduction of a market mechanism (managed competition) into Medicare without embracing the free market attack on Medicare by market economists and the private insurance health industry in order to introduce a for-profit model that would be driven by the insurance industry.

The purpose is to slow growth in health expenditure, a key or core policy issue for state and commonwealth governments, by introducing a degree of self-regulating capacity within health care systems. Richard Scotton argues that:

The managed competition model offers a framework within which the objective of increased efficiency could be pursued without sacrificing the goal of universal access and without the impairment of health outcomes and social cohesion which the abandonment of this access would involve.

Medicare Select is a universal, tax-funded health insurance scheme based around the purchaser-provider distinction.

It formed part of the National Health and Hospitals Reform Commission's proposal to move towards a single government funder across the care continuum – both inside and outside hospitals .The ‘Medicare Select’ model suggests a transition of the commonwealth government from a funder of services to a purchaser of services.This involves the separation of the government from the functions of the organization and management of care consumption (eg.,explicit rationing of services) and the provision of care or health services. These functions would generally be undertaken by different organisations.

Who then provides the health or care services? Those called 'budget holders'. These would mostly be existing private health insurance funds. Consequently, Medicare Select represents the expansion of the private sector in health care, and it is likely that managed care would be used as a tool in managed competition.

The Parliamentary Library describes this scheme thus:

Under Medicare Select, the Commonwealth Government would become the sole public funder of health services. It would then distribute funds to intermediary bodies called ‘health and hospital plans’. The government would operate at least one plan, which would compete on equal footing with plans operated by not-for-profit or for-profit organisations.By establishing these plans, the Commonwealth Government would separate the funding or purchasing functions in health care from service provision. Economists refer to this as a ‘purchaser-provider split’ and many suggest that it increases efficiency, largely because single funders tend to have lower administration costs and substantial power in negotiations with providers.

Under Medicare Select, membership of a plan would be compulsory thereby ensuring universal access to basic health services. All people would initially be members of a government operated plan but would be free to choose another one after the scheme began. Plans would be required to accept anyone who wished to enrol. There would probably be some restrictions on when and how people could change plans, as there are in other countries with similar systems.

| Posted by Gary Sauer-Thompson at 7:21 AM | | Comments (3)


Scotton offers a third way between the free market's privatisation of health care as in the US and public provision of health care.

Of the former he says:

Many of their attacks are designed to promote the proposition that Medicare is in a state of crisis and can no longer be ‘afforded’—a proposition at odds with the Australian record of maintaining total health expenditures at about the average level of non-US OECD countries. The policy implications of this view are that efficiency gains in the health sector be achieved by abolishing universal entitlements and replacing them by means-tested subsidies for the poor and medical savings accounts for the rest of the population.

Such programs, he adds, would be rewarding to those in better health and economic circumstances and to many (especially the larger and more entrepreneurial) providers and insurers, but singularly disadvantageous to people in neither of these categories.

managed care plans are about controlling health costs by causing the health-care industry to become more efficient and competitive.

In the hands of the US private health insurance industry costs are reduced by denying medically necessary services to patients, even in life-threatening situations, or by providing low-quality care. The private health insurance industry in the US is more interested in saving money than providing health care.

NIck Miller and Louise Hall in The Age say that Nathan Rees, the ex Premier of NSW, had proposed a national health commission, to be run by federal and state officials, clinicians and local community representatives.

The commission would set health policy and act as a funnel for all Commonwealth and state health funding including Medicare, aged care, hospital and community care. The money would be divided between large regional health authorities that would deliver all health care - from prevention and screening, through to GPs and allied health, hospitals, rehabilitation and community aged care.

The idea of regional health authorities was rejected by the Federal Government's National Health and Hospitals Reform Commission.

Miller, who runs a blog called Triage says that the reason was that experience in other countries had shown it was difficult to set a fair budget for regions, leading to dissatisfaction and contested decisions. The regions would be an extra layer of cost and bureaucracy, and there were ''dangers of 'Balkanising' health services, with people's access to care determined by the region they live in''.