The major casualty

Australia’s present private-public healthcare mix is unsustainable, argues Gwendolyn Gray in this extract from her new book, The Politics of Medicare, published by UNSW Press in association with Australian Policy Online HEALTH policy conflicts are so intractable, it has been said, that political rivals can be vanquished simply by giving them responsibility for the portfolio. Since the emergence of modern medicine towards the end of the nineteenth century, health ministers in Australia, as in most industrialised countries, have been regularly embroiled in do-or-die struggles between unyielding interests. Health has been a major issue at almost every federal election since the 1940s and disputes have raged between elections. Nowhere is Harold Lasswell’s view of politics as a struggle over who gets what, when and how more clearly exemplified than in the politics of health policy. Huge benefits flow from the production of health services, and the shape of a nation’s health system largely determines who gains and who loses. Health is big business. Average spending in OECD countries was 8.4 per cent of gross domestic product in 2001. Australia’s spending in the same year was 9.2 per cent of GDP; in the country with the highest costs, the United States, expenditure was 13.9 per cent of GDP. The enormous size of health as an industry can be illustrated by a comparison with defence: in 2001, Australia spent well over five times as much on health as on defence; in the United States health spending was four-and-a-half times higher than defence spending. For providers, high profits and high incomes are at stake. For citizens, the central question is whether access to high-quality and appropriate services is affordable. And governments have their own set of concerns: ideology, electoral advantage and issues of principle are important but, throughout the OECD, the overriding government objective of the past two decades has been to restrain escalating health care costs. These three sets of objectives - high profits and incomes, affordable access to quality services and control of total health care expenditures - cannot all be achieved at the same time. The stakes, therefore, are high. Nowhere, with perhaps the exception of the United States, have health financing policies been more vehemently contested than in Australia. In keeping with the tradition of perpetual struggle, 2003 was a troubled year in Australian health policy. Continuing anxiety about declining levels of general practitioner bulk billing manifested itself in lively political activity from the beginning. As the primary instrument for removing the financial barriers that prevent people from using medical services, bulk billing is a fundamental building block of Medicare. By the end of the year, little had been achieved: the government’s efforts to defuse health policy as a political issue had failed. And the passage of the revamped Medicare Plus in March 2004 has done nothing to resolve the main problems of the system. Public disquiet intensified when, in February 2003, an ACNielsen poll found that bulk billing had declined sharply and predicted that, within six months, only 22 per cent of general practitioners would offer this payment method for all services. When the prime minister claimed in March that bulk billing was never meant to be universal he set off another round of argument; ‘leaks’ about proposed reforms served only to magnify the controversy. The announcement of the Fairer Medicare reform package at the end of April 2003 pleased no one. It was condemned by all major stakeholders, provider and consumer groups alike, and all the other political parties. The Labor opposition pledged a double injection of funding to ‘revive’ Medicare. In the meantime, ‘defend Medicare’ groups formed around the country and existing groups stepped up their activities. Official statistics showed that general practitioner bulk billing had fallen to its lowest level in thirteen years and headlines like ‘Economic rationalists move in on Medicare’ appeared. Leading journalists were generally critical, and some, like Alan Ramsey, claimed that the prime minister had always intended to dismantle Medicare, despite his promise in 1996 that the scheme would be retained ‘in its entirety.’ Opinion polls showed that only 10 per cent of people thought they would be better off under the Fairer Medicare plan and 77 per cent of people thought that the tax cuts of the May budget should have been spent on health and education. Enabling legislation failed to pass the Senate, where the Democrats moved to establish a select committee to examine Medicare issues, including the likely impact of the proposed package on access, affordability and service quality. In June, the government indicated that it was willing to negotiate with the Democrats and independents in the Senate but it was unable to secure the passage of its legislation. Debate continued throughout the winter, fuelled by evidence from multiple perspectives presented to the Senate committee and by a report, commissioned by the Royal Australasian College of Surgeons, which found that elective surgery was increasingly being moved to private hospitals and that citizens without private insurance were being denied access to a range of surgical procedures. In August, research from the Australian Institute of Health and Welfare showed that health costs had increased more than twice as fast as other prices in the previous year, reaching an all-time high of 9.3 per cent of GDP. More damaging for the government was the finding that direct charges to patients had increased even faster, by 7.7 per cent each year in real terms between 1997 and 2002, the period covering most of the government’s term of office. At the end of September, the prime minister announced that Tony Abbott would replace Kay Patterson as health minister. The Senate committee, whose government members were in a minority, reported in October 2003. It concluded that the Fairer Medicare package would lead to a further decline in bulk billing for non-concession cardholders and that working families and those with chronic illnesses would be most severely affected. It recommended that the main planks of the package be rejected and that policies be developed which would be oriented ‘towards the role of Medicare as a universal insurer, with equal benefits for everyone.’ Amid the release of statistics showing a further decline in bulk billing and reports that voters rated health a priority issue, the new minister announced that he was looking at proposals to amend the package. The prime minister announced ‘Medicare Plus’ in November. The central feature was a commitment to spend an additional $1.5 billion, to be used mainly for additional payments to doctors who continued to bulk bill concession cardholders, for more comprehensive safety nets and for additional training places for doctors and nurses. Minister Abbott announced that he was ‘reasonably optimistic’ that the necessary legislation would be passed in the Senate within a fortnight. He was to be disappointed. The fate of Medicare Plus, quickly tagged ‘Medicare Minus,’ by Labor leader, Simon Crean, was similar to that of the previous package. With one exception, the same array of groups condemned the new proposals because, as in the Fairer Medicare package, the assumption remained that user charges would be a permanent and major financing mechanism. The Australian Medical Association (AMA) cautiously welcomed the scheme as a ‘second best’ option. It suggested that the money could have been better spent on an across-the-board increase in the general Medicare rebate to doctors. Minister Abbott’s attempts to negotiate with the Democrats and independents in the Senate, like the efforts of his predecessor, Senator Patterson, were unsuccessful. During discussions, broader issues, such as the low bulk-billing rates among specialists, were raised, compounding problems. On 25 November, the Select Committee on Medicare was reconstituted to conduct an inquiry into key elements of Medicare Plus. The government’s efforts to resolve health policy problems before 2004, an election year, had come to nothing. After intense negotiations and significant government concessions, Medicare Plus finally passed the Senate in March 2004. Because the legislation does not address the fundamental structural flaws of the two-tiered arrangements, health will continue to be a high-profile political issue. Despite the arguments and counter-arguments, the moves and countermoves, 2003 was not an unusually contentious year in Australian health politics. Since the McGowan government tried to reform the NSW hospital system in the first years of the twentieth century, every attempt to introduce major change has been engulfed in intense controversy. Other notable periods of disputation, at times bordering on hysteria, include the proposal to introduce national health and pensions insurance in the late 1930s, Labor’s attempt to introduce a national health service in the 1940s and the introduction of Medibank, Medicare’s prototype, in the 1970s. In the case of Medibank, the claims that participants made and the lengths to which they were prepared to take their political activities seem extraordinary in 2004, given that national health insurance has operated for twenty years. The AMA launched a political campaign of enormous proportions. It engaged a public relations firm, placed advertisements in all sections of the media (including 250 television commercials a week) and distributed 16,000 publicity kits in 1973 alone. Doctors went on speaking tours across country and engaged the public relations services of a former Miss Australia, Sue Gallie. At the same time, every effort was made to influence members of federal parliament. The opposition spokesperson for social security, Senator Don Chipp, argued in the national legislature that the introduction of Medibank would create anarchy. ‘Anarchy,’ he said, ‘is a situation not unknown to socialists. It is part of their bread-and-butter.’ The manager of the Medical Benefits Fund of Australia, a large voluntary insurance organisation, claimed that the new scheme was based on Karl Marx’s theories and that health care would henceforth be bought at the ‘government shop.’ The dynamics underpinning health policy struggles are not well understood. Opinion polls, for decades, have reported that large numbers of citizens, sometimes up to 45 per cent, cannot answer straightforward questions about proposed policies, even when the issues in question are high on the political agenda. Leading journalists, too, frequently seem unclear about the details and cogency of arguments. One of the main reasons for confusion is the complexity of financing and benefit arrangements in a two-tiered system, which is being made more complicated by the day. Another reason is that contending interests push their own perspectives (often disguising them as the interests of others), making it difficult to assess their validity. As in other countries, the views of well-resourced, institutionalised provider groups tend to dominate public discussions; the voice of the community, where groups have relatively few resources, is weak. The information problem was articulated by the ABC radio presenter (and lawyer), James O’Loghlin, at the end of 2003: I’m still wading my way through the whole Medicare thing... It’s quite embarrassing, because it’s one of the big issues of the year, but I still have to go back and think, ‘Okay, what’s the gap again, and how does that work, and how does the rebate work, and why is it if I don’t have private health insurance I’m somehow worse off financially because of the rebate thing?’ The present system is inherently - and fatally - unstable. Moreover, it creates serious problems for access and equity: as doctors raise their fees and abandon bulk billing, the user charges that people pay will become both higher and more widespread, deterring people from seeking the care they need. Medicare cannot co-exist with a large private hospital insurance sector and a system in which doctors are free to choose their own fees, except at the cost of huge taxpayer subsidies to private insurance or the virtual destruction of Medicare. Because the health debate focuses on hospital and medical services, it concentrates attention - and resources - on services for the sick. These are crucially important but they are not the only services that we should expect a health system to provide. Politically, there has been little room for considering the way the health system should be organised or the way doctors might be paid. The social environment is not seen as a health issue and the preventive and support services that might improve population health are a dead issue, discussed largely within small groups of experts. The evaluation of treatments is rarely discussed. And the major casualty is health itself. Gwendolyn Gray is a senior lecturer in political science at the Australian National University. Her book, The Politics of Medicare, is published this month by UNSW Pres