A lot of the ideas that I think need to be at the centre of the health reform process - such as greater personal responsibility for health expenditures and a larger role for private sources of health care financing and insurance - are seen as illegimate. The catch all response to any suggestion that we should move towards the more market-based system I am going to advocate is that this will take Australia down the inequitable US private health care path.
That maybe an effective political response if your objective is to preserve Medicare as is. But it does not address the financial challenges facing the Australian health system, given the impact of population ageing on health expenditure, and the inveitable consequences escalating costs will have on rationing of care. I also think it is wrong in fact, and that well-designed reforms can actually increase the fairness of the health system by correcting the inequities and inefficiencies inherent in the existing Medicare scheme.
Politically speaking, however, the kind of health reform I am going to talk about is difficult to achieve. The health system is the largest entitlement economy in the country, and politicians get nervous at the mere thought of taking entitlements away from any group of voters let alone the millions of consumers and hundreds of thousands of producers of health services.
But that is what structural reform is about – telling people that they are no longer entitled to the share of public resources they are accustomed to recieve, because there are better ways to deploy these resources and to fund and deliver health services for the benefit of the community.
The unwillingness to face the structural reform challenge in health leads to the kind of piecemeal approach to so-called health reform that is the norm: such as spending more on preventive health, or on coordinated primary care. These popular strategies have I believe been over-sold as so-called ‘solutions’ for problems like rising costs and hospital overcrowding, even though the evidence that they will be effective is scant.
This is another point at which I depart from the orthodox thinking. Health is usually treated primarily as a social policy problem that can be solved by creating new entitlement or programs –Super Clinics, Medicare Locals, GP Management Plans, National Preventive Health Agencies. I think the solutions for the major challenges facing the health system – including gaps in chronic disease care and public hospital waiting times – lies in treating health primarily as an economic problem involving how to use increasingly scarce health dollars to receive more, better, and more effective health care in coming decades.
What I’m going to do is outline the sustainability problems facing Medicare, what the consequences might be, and suggest some reform options that will improve the long-term financial sustainability of the Australian health system. In a nutshell, I’m going to argue that what needs implementing are policies that introduce more self-financing and allow for health care to be funded by saving over-time, with a much greater emphasis on using choice and competition to increase the efficiency of the health system.