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Elderly to benefit from Labor Medicare plan -

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Broadcast: 29/09/2004

Elderly to benefit from Labor Medicare plan

Reporter: Tony Jones

TONY JONES: Back now to our top story.

And as Mark Latham hugged his 88-year-old political mentor he may well have whispered in his ear,
"This one's for you, Gough."

For Medicare Gold, as well as being the centrepiece of Latham's campaign launch, is also his most
Whitlamesque policy.

In fact, it could even herald an end to the ALP's negative election advertising.

It's easy enough to envisage a new positive ad campaign, with crowds of elderly folk throwing aside
their walking frames and singing "It's time!"

For a hip replacement.

Well, the architect of the policy is the Shadow Health Minister, Julia Gillard.

I spoke to her in Brisbane a short time ago.

Julia Gillard, thanks for joining us.


TONY JONES: With Medicare Gold, are you effectively nationalising hospital care for the over-75s?

JULIA GILLARD: No, certainly not nationalising.

What we're doing is, we're saying that a Mark Latham Labor government would pay for all of the
hospital costs of people 75 and above.

And we'd pay for them in the public and the private sector.

So, it's a guarantee to people 75 and above that when they need a hospital bed they'll get one in a
public or a private hospital.

TONY JONES: Do you not like the term 'nationalisation'?

It seems an element of that, at the very least.

Is that because people associate that with bureaucracies and second-rate services, and so on?

JULIA GILLARD: Well, this is not nationalisation, Tony, it's a universal health system.

It's the biggest extension to Medicare since Labor invented Medicare and it's a universal system
for people 75 and above.

There's choice in the system.

In fact, people who never had the choice before about going to a private hospital will have it for
the first time.

People will be able to have options between public and private hospitals and choice of doctor.

TONY JONES: Yes, how is that going to work?

I'd like to get you to explain that for us, if you can.

The key promise Mark Latham made here - "we will ensure that they can access a hospital bed, public
or private," as you just said, straight away.

How can you do that?

JULIA GILLARD: Well, you can do that by growing the system and that's why we intend to do this.

This is a $2.9 billion investment.

It means we can grow the system.

It's funded for growth.

And because of that we can say to older Australians, "If you need a hospital bed, then we will get
you one in a public or private hospital."

So we are harnessing the capacity of the private sector to help deliver services to older

We are driving a situation where, for the first time ever, the Commonwealth will have
responsibility for the hospital costs of older Australians as well as the residential aged care

So it's good policy because it will drive efficiency between those two systems, which is a major
problem now.

And of course it's a great guarantee for older Australians.

TONY JONES: Alright, let me get this straight.

If I understand you correctly, you're going to take public money and give people the choice between
a private hospital and a public hospital with no waiting list.

How do you do that?

JULIA GILLARD: Well, how you do that is you say if you are a person who's 75 and above and you need
to go to hospital, or if you need to go to hospital urgently, you'll end up obviously going to an
emergency department and being admitted to the hospital where you go to the emergency department.

We will pay for that hospital bed.

If you were an older Australian who needs an elective operation - you might need a hip or a knee or
a cataract surgery - then you will go through your GP to a specialist.

Your specialist will recommend a hospital for you to go to.

It might be the local public hospital.

It might be a private hospital that specialist works from, and a Latham Labor government will pay
for that bed so that you can get into that bed and get your operation done with no unnecessary

TONY JONES: Alright, but what if everybody on these lists say to their specialist, or to their GP,
"I want to go to that fancy private hospital just down the road.

I don't want to go to the public hospital."

JULIA GILLARD: Well, what we funded Medicare Gold for is to give people the option of having
standard hospital cover in private hospitals, so we won't be saying that people can go in the sense
of funding all luxuries in private hospitals.

There will be standard hospital cover for people, so it's the equivalent, if you like, of having
standard private hospital insurance now.

If you go to a private hospital it will meet the costs of your care.

There may be some out of pockets for extras, things that are put on, DVDs, televisions, those sorts
of things, some minor out of pockets, but we have funded the model so that in 85 per cent of cases
people will be able to go to a private hospital without out-of-pocket costs.

TONY JONES: So, if a sick 75-year-old or older person said, "I want to go to the private hospital,
not the public hospital," that's OK, no bar to that?

JULIA GILLARD: That's right.

We've got to remember, how do people end up choosing hospitals?

People end up choosing hospitals basically because they want to go to the one near their home.

Clearly, when people are in hospital they want to be in hospital as close to home as possible so
people can come and visit them.

We're talking about older Australians who obviously aren't going to travel far.

And then the other thing that affects the choice as to whether people go to a private or a public
hospital, or which hospital they go to, is choice of doctor.

So people will make decisions based on those two choices.

TONY JONES: Alright, this effectively will take that elderly group out of private insurance, or
most of them at least.

The PM says once you start losing members, premiums will go up.

You're saying they'll go down?

JULIA GILLARD: Well, the PM needs a basic lesson in private health insurance 101.

The issue with older Australians in private health insurance is this - they make up 5 per cent of
the members of private health insurance but they cost 23 per cent of the expenditure.

They are, by definition, high users of health services, so they cost private health insurers more
than they put into the insurance pool.

So if a Federal Labor government takes over their hospital costs, these people over 75 don't need
their private health insurance anymore.

That's good for the private health insurance system and it will mean that premiums can come down
for everybody else.

TONY JONES: Alright, what will it mean for those elderly people who have paid for private health
insurance most of their lives?

If they keep it going, do they get any extra benefits?

I mean, do they jump ahead on waiting lists still as they do now, or do they get private rooms?

I mean, are those things still going to be available?

Will they still have those choices?

JULIA GILLARD: There'll be no need for Australians 75 and above to insure for private hospital
cover, standard private hospital cover.

If people want to insure against the cost of the out-of-pocket extras, the cost of going to a
hospital where you want non-standard facilities, you want the extras - single rooms, televisions,
special services - you will be able to get an ancillary service product to cover those
out-of-pocket costs, but, as I say, in 85 per cent of cases people will be able to get a private
hospital bed with no out-of-pocket costs.

If they want to insure against the risk of the out-of-pocket costs in the other 15 per cent of
cases, then they can.

This is great for the sustainability of private health insurance because it lifts off the shoulders
of private health insurance the cost of older Australians.

It means everybody else's private health insurance premiums can come down by at least 12 per cent,
so the PM's got it 100 per cent wrong.

This is great for private health insurance, great for its sustainability and great news for younger
Australians who have private health insurance because it's going to be cheaper for them.

TONY JONES: What's the guarantee you're giving about these waiting lists?

How quickly can there be made available enough hospital beds to make sure there are no waiting
lists when right now we know there are long waiting lists for many people?

JULIA GILLARD: There are long waiting lists for many people.

Many older Australians do wait more than 12 months to get things like a hip operation or a knee

What we will do with Medicare Gold is we will start the model on 1 July 2006.

Obviously, when you're implementing the biggest change to Medicare since Labor invented Medicare it
takes some set-up time.

Once the model is in operation we will be looking to clear the backlog on waiting lists and then
have the model work for all time.

TONY JONES: How long does that take?

JULIA GILLARD: This will obviously take the set-up time to July 2006 and then a bit of time to
catch up.

But beyond that, this isn't a policy that we've just designed for the next few years.

This is a great new addition to Medicare.

When we did Medicare we built it to last for all time.

A Latham Labor government is going to build Medicare Gold to last for all time, so into the future
older Australians will have a guarantee of getting hospital care when they need it.

TONY JONES: So when it starts up there will still be waiting lists?

JULIA GILLARD: Waiting lists don't disappear on the second day of Medicare Gold.

Obviously it takes some time to get through the people currently on the waiting lists.

But into the future, there will be no more waiting lists, because a Labor government will have
built a whole new addition to Medicare that means a bed in a public or private hospital will be got
for older Australians when they need it.

TONY JONES: It sounds like you might be being a bit optimistic.

Do you have any idea, is there a guarantee you can give us tonight as to when those waiting lists
will be over?

JULIA GILLARD: Well, I can't give you a guarantee about exactly which date, but I can say this -
with $2.9 billion of money in the health system we will be able to expand the capacity of the
public and private hospitals to get through the waiting lists, to get through the backlog and to
make good on the promise that in the future, and for all time, older Australians will not have to
wait in hospital queues.

TONY JONES: Yes, "for all time" is another big promise.

How far out have you projected the costs of this with your actuaries?

JULIA GILLARD: Well, we have projected the costs of Medicare Gold over the forward estimates, the
four years that we're required to produce figures for.

That's what the Government accounts for, but over the longer term we believe Medicare Gold is a
great model to drive the most efficient and quality health care for older Australians.

One of the key problems for our public hospital system now is on any given day 10 per cent of acute
public hospital beds are filled by frail aged people who should be in a nursing home, would be
better off in a nursing home - it would be cheaper for the system if they were in a nursing home -
but that doesn't happen because the Federal Government underfunds aged care.

And it underfunds aged care because it doesn't matter to the Federal Government, the Howard
Government, if frail aged people are in acute hospital beds because they aren't running that part
of the hospital system.

Under Medicare Gold, with the Commonwealth Government taking responsibility for hospital costs for
older Australians, as well as residential aged care for older Australians, we'll obviously be
motivated to drive the best possible model of quality care for them and not have them in acute
hospital beds when they don't need to be there.

TONY JONES: Alright.

It is also a model for increasing costs, inevitably though, isn't it?

I mean, right now, over the age of 75 there are 1.23 million Australians, is that what you've

JULIA GILLARD: That's right.

There are over 1 million Australians who are 75 and above.

TONY JONES: In 10 years time there'll be 1.5 million.

1.6 million in 20 years time, 2.26 million, according to the census.

That means the figures are going to double within 20 years.

That means, surely, the costings of doing this are going to double, or perhaps more than double,
given the already increasing costs of medical care.

JULIA GILLARD: Well, Tony, whoever's in government and whatever our model of health care, we're
going to face the challenges of an ageing society.

But what's great about this model is it drives one level of government to get beyond the blame
shifting, the cost shifting of the past.

It breaks through the old public-private divide and it means that one level of government,
unhindered by the public/private divide, will provide care for older Australians and will be
motivated to provide the best quality and most efficient care.

TONY JONES: But Julia, that depends, doesn't it, as to whether or not future governments can
actually afford to do that?

It's a very expensive measure.

It's a measure which is going to double in costs at the very least over the next 20 years.

My question to you is - why didn't you means test it to make sure the cost could be kept at bay, as
it were, and you could actually control the costs and target it where it's needed?

JULIA GILLARD: Because the evidence from all around the world is that universal health systems are
not only the most equitable health systems, they're the most efficient health systems.

I'm sure when Labor built Medicare there were people saying "Well, why don't you means test access
to bulk-billing?"

And Labor said, "No, we want to build a universal health system," and we did, and it's proved not
only to be an equitable health system for Australia, it's economically efficient as a health

We spent about 9.3 per cent of our national income on health.

The Americans, who have a highly privatised system, spend more than 14 per cent of their national
income on health and they get a worse health system for the money.

So universal health systems, systems that are provided for everybody, actually end up being the
economically efficient model as well as the equitable model.

It's true of Medicare and it will be true of Medicare Gold.

TONY JONES: A final question on the politics of this - can you see this policy having a big effect
in marginal seats with high proportions of elderly voters, like Hindmarsh in Adelaide, Dobell,
Robertson, Eden-Monaro in NSW, Swan in Perth, to name just a few?

JULIA GILLARD: Well, look, I think Australians are pretty savvy people and I think they're pretty
smart as voters.

I've got a great deal of trust in the Australian people and I think they'll see a good health
policy and acknowledge it when they do see it.

This is a great health policy for older Australians.

It's a great health policy for people who want to keep private health insurance in younger age
ranges because it makes it cheaper for them and, more than anything else, it gives everybody piece
of mind.

Older Australians piece of mind that they'll get a hospital bed when they need one and Australians
in my age range peace of mind that our parents will get the best possible deal in health.

TONY JONES: You have made those points a few times and I'm happy for you to make them again, but I
did ask you specifically about the politics of this, the effect on marginal seats with high levels,
high proportions of elder voters.

What do you think, what effect will it have in those marginal seats?

JULIA GILLARD: Well, look, I think older voters in those seats and across the country will rightly
be saying to themselves, "Mark Latham is going to give me Medicare Gold, Mark Latham is going to
index my pension, and Mr Howard's taken me for granted."

TONY JONES: Julia Gillard, we thank you very much for coming in to talk to us.

And it's your birthday, so happy birthday!

JULIA GILLARD: Thank you very much.

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