AS the federal government prepares for another attempt to means test the private health insurance rebate, isn’t it time we had a proper discussion about this controversial element of our health system?
A lot of claims are made on both sides, but finding clear evidence about the rebate’s impact on hospitals and the patients they serve is harder than getting to the front of an elective surgery waiting list.
In 2005, 6 years after the introduction of the rebate, the then Health Minister Tony Abbott said (as he announced yet another rise in health insurance premiums): “Every patient treated in a private hospital is one less patient on a public hospital waiting list.”
As if anything in the health system is that simple.
It’s certainly possible to argue, as the insurers and others do, that the rebate has reduced pressure on the public system by encouraging more patients to go private.
But it’s equally possible to claim the rebate is an example of “middle-class welfare”, one that shifts resources from the public to the private sector, leaving the public system less able to meet demand.
A summary from the Federal Parliamentary Library last week made clear that we simply don’t know what the net impact has been, partly because the differences in caseload between the two systems make it risky to assume an increase in one represents a straight transfer from the other.
We do know that the private system increased its share of admitted patients over the 6 years following the introduction of the rebate. But the picture is complicated by the fact that demand increased across both systems over the same period, as did the median waiting time for elective surgery in public hospitals.
The health system is a complex beast and there are many possible reasons for an increase in demand — our ageing population, the introduction of new treatments, and even the rebate itself, if it led patients or doctors to believe services would be more available or affordable.
When talking about insurance of any kind, it is worth keeping in mind the economists’ concept of the “moral hazard” — the idea that people behave differently when they are insulated from the consequences of their actions. Optometrists’ advertisements urging people not to miss out on the “free” glasses they are entitled to under their health insurance might be an example of that.
Unfortunately, debate about these issues always takes place within a fog of ideology, as the conservative side of politics gets all warm and fuzzy over anything with the word “private” in front of it, while Labor gets gooey about the other “p” word.
Imagine if we could instead find solid evidence for decisions about how we spend our health dollars — and rather a lot of health dollars in this case, as the current rebate is estimated to cost government more than $4 billion each year.
Rather than tinkering around the edges with means testing, we might then be able to answer some bigger questions: What is this rebate designed to do? And is it giving us value for money?
Jane McCredie is a Sydney-based science and medicine writer.
Posted 6 June 2011
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