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Labor's health plan - a gross deception



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FROM THE C O M M O N W E A L T H MINISTER FOR HEALTH THE HON. M. J. R. M A C K E LL A R

EMBARGO 3PM E.S.T. 1 1 MARCHT9P'1

LABOR'S HEALTH PLAN - A GROSS DECEPTION

The Minister for Health, the Hon. Michael MacKellar, M.P., announced today that a thorough analysis of Labor's health scheme proposals, had been undertaken and showed that the cost of the scheme has been grossly under-estimated.

The extent to which Labor has under-estimated the amount they would need to raise would be considerably more than $350 million.

Labor's scheme is misleading, Mr MacKellar said. The estimates of cost are so inaccurate that it is best described as an attempted confidence trick on the Australian people.

Labor claims that its health scheme is cheaper and better were refuted by Mr MacKellar. In fact, it is dearer and worse. The Minister went on to say that the analyses have found that if the ALP were to genuinely use an income tax

levy to recover the real cost of the scheme, then that levy would have to be set as high as 1.2 per cent instead of the claimed 0.75 per cent. And this is only in the

first year.

Labor had also seriously underestimated the cost of private insurance under its scheme. The cost of additional hospital funds which would be needed for the States can be put conservatively at $150 million, but could be more than $200 million.

With the income tax levy at its real rate of 1.2 per cent families with an income of over $190 a week and wanting the doctor of their choice would be yrorse off under Labor's scheme. As the salary level rose the net cost qf Labor's scheme to families wanting doctor of choice iwould be higher

All single people wanting doctor of choice and earning more than $110 a week would also be worse o f f .·, _ Mr MacKellar, continuing, said that pensioner's and persons in special need obtaining private medical treatment through

their doctor of choice would also suffer. These;people now receive 85 per cent of the schedule fee with a maximum payment of $5 for any one service. Under the Labor scheme they would face a maximum payment of $10 for any one private medical service.

still.

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Under the Government's health scheme, people who take out health insurance receive a tax rebate of 32 cents in the dollar. That rebate would be abolished under the Labor scheme. But Labor has over-estimated the <

gain to revenue by the abolition of that tax rebate by $190 million, Mr MacKellar said. '

In QUEENSLAND people will have to pay an income tax levy,for health services that are now free and financed by Queensland already through their own tax and other financing system. On present figures, over a million people would be affected.

In NEW SOUTH WALES a family would in fact have to pay as

much as $4.50 extra a week on, top of the income tax levy for hospital insurance in order to ensure doctor of choice in public hospitals. Labor estimated this cost to be $3.00.

While the financial cost of L a b o r 's scheme would be serious enough, the damage to the quality of the health services could be even more profound, Mr MacKellar said.

Mr MacKellar also said that the resources of public hospitals would be seriously strained which in turn would mean the development of long queues for patients waiting to be treated. There would also be a grave danger of the breakdown of the public hospital system unless the ALP was prepared to allocate huge amounts of extra money to provide the additional facilities that would be

needed, Mr MacKellar said that this money could come only from higher taxes.

Labor's intention of expanding bulkbilling would be an incitement to fraud and overservicing and would take away the element of patient scrutiny in the provision of health services.

Mr MacKellar commented that the claim that there can be a "free" health scheme is cruelly misleading and a . deception to the sick and those in special need.

Mr MacKellar estimated that the cost of establishing a new ALP Government insurance fund could be as much as $60 million.

Concluding, Mr MacKellar said that what emerges clearly from analysis of the scheme is that:-. its cost would be a major burden on the nation's

economy which would grow substantially each year unless services and facilities were curtailed;

. it would inevitably lead to higher taxation;

. it would put a grave strain on public hospital services, leading to queues and delays;

. it would create an even larger government bureaucracy at a time when people want less government intervention in their lives.

Brisbane . .

1 March, 1982

FROM THE :

C O M M O N W E A LT H MINISTER FOR HEALTH THE HON. M. J. R. M ACK ELLAR

LABOR'S RECYCLED HEALTH PLAN

THE A.L.P. HEALTH PLAN IS YET ANOTHER EXAMPLE OF

LABOR'S IRRESPONSIBLE, BIG SPENDING POLICIES:

. THE COST IS SERIOUSLY UNDERSTATED;

. FROM THE EXPERIENCE OF THEIR PREVIOUSLY

FAILED MED IBANK SYSTEM, THE A.L.P. PLAN

WOULD PLACE SERIOUS PRESSURES ON HEALTH

COSTS WITH THE INEVITABLE RESULT OF

HIGHER TAXATION;

. IT WOULD BE MORE COSTLY FOR MOST PEOPLE

WANTING FREEDOM OF CHOICE OF DOCTOR WHO .

TREATS THEM AND THEIR FAMILIES IN PUBLIC

HOSPITALS;

. OPEN ACCESS TO HOSPITALS WOULD ENCOURAGE

INCREASED HOSPITALISATION FOR LONGER PERIODS;

. IT ABANDONS THE PRIVATE SECTOR IN THE FIELD

OF HEALTH INSURANCE IN PREFERENCE FOR A

MONOPOLISTIC; CENTRALISED, GOVERNMENT SYSTEM;

..2/

FOR THE VAST MAJORITY OF PEOPLE WHO WILL

RETAIN BASIC HOSPITAL INSURANCE AT THE

PROJECTED LOW LEVEL OF PUBLIC HOSPITAL

CHARGES.» ACCESS TO PRIVATE HOSPITAL BEDS

WILL BE WELL BEYOND THEIR MEANS WITH

SERIOUS IMPLICATIONS FOR THEIR CONTINUING

OPERATION;

WITH THE SEVERE REDUCTION IN THE NUMBER

OF PRIVATE BEDS IN PUBLIC AND PRIVATE

HOSPITALS PEOPLE WILL BE DENIED THE CHOICE

BETWEEN TREATMENT AS A PUBLIC OR PRIVATE

PATIENT. THEIR PRIVATE HOSPITAL INSURANCE

WILL BE USELESS;

IT WOULD LEAD TO AN EVER INCREASING DEMAND

FOR SERVICES AT PUBLIC HOSPITALS - THIS IS

THE COSTLY SECTOR IN HEALTH CARE - AND THEY

WOULD BE UNABLE TO COPE UNLESS THE A.L.P.

PROVIDED MASSIVE ADDITIONAL FUNDS TO

UNDERWRITE THE EXPANSION OF THE PUBLIC

SECTOR ITS POLICIES PROMOTE;

IT WOULD UNDO THE EXCELLENT WORK THAT HAS

BEEN DONE IN CO-OPERATION WITH ALL STATES

DURING THE PAST FIVE YEARS IN REDUCING THE

EXTENSIVE OVER-UTILISATION OF THE PUBLIC

HOSPITALS WHICH AROSE FROM THE PREVIOUS

LABOR PLAN;

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. USERS AND PROVIDERS OF HEALTH GARE WOULD

BECOME LESS AWARE OF THE COSTS THEY WERE

GENERATING,

A.L.P. COSTINGS SERIOUSLY UNDERSTATED

GOVERNMENT ESTIMATES INDICATE THAT THE A.L.P. HAS

UNDER-ESTIMATED THE COST OF ITS HEALTH SCHEME AND

THE ADDITIONAL AMOUNT WHICH THEY WOULD NEED TO

RAISE VERY SUBSTANTIALLY;

. THE ADDITIONAL AMOUNT REQUIRED COULD WELL BE IN EXCESS OF $350 MILLION

THE A.L.P. HAS OVER-ESTIMATED BY $190 MILLION THE REVENUE

GAINS ACHIEVED BY ELIMINATING THE PRESENT TAX REBATE OF 32 CENTS IN THE DOLLAR FOR ALL PEOPLE TAKING OUT BASIC HEALTH INSURANCE.

IT HAS UNDER-ESTIMATED THE COST OF ADDITIONAL HOSPITAL

FUNDS TO THE STATES BY AT LEAST $150 MILLION AND POSSIBLY

IN EXCESS OF $200 d e p e n d i n g on h o w m a n y p e o p l e RETAIN HOSPITAL INSURANCE.

THE TABLE AT ATTACHMENT Ά ' DEMONSTRATES THE EXTENT TO

WHICH THE A.L.P. HAS UNDER-ESTIMATED THE COST OF ITS

SCHEME. '

. Λ /

- 4 -

WHAT DOES THIS MEAN FOR THE INDIVIDUAL?

IF THE A.L.P. IS GENUINE IN ITS INTENTION TO USE THE

LEVY TO RECOVER THE ACTUAL ADDITIONAL COST OF HEALTH

SERVICES UNDER ITS SCHEME, IT COULD WELL NEED TO BE

SET INITIALLY AS HIGH AS 1.2 PER CENT INSTEAD OF

LABOR'S CLAIM OF 0,75 PER CENT;

THE COST OF HOSPITAL INSURANCE HAS ALSO BEEN SIGNIFICANTLY

UNDER-ESTIMATED; ,

. ON THE BASIS THAT THERE WOULD BE ONE

CONTRIBUTION RATE FOR PRIVATE ACCOMMODATION

IN PUBLIC HOSPITALS, A FAMILY IN NEW SOUTH

WALES MAY HAVE TO PAY AS MUCH AS $4.50 PER

WEEK INSTEAD OF LABOR'S ESTIMATE OF $3.00

(ATTACHMENT Έ ' ) , THIS IS OF COURSE, IN

ADDITION TO THE COMPULSORY LEVY.

LABOR'S HEALTH SCHEME IF PROPERLY COSTED, WOULD THEREFORE BE MORE COSTLY TO THE MAJORITY OF THE POPULATION WHO HAVE

DEMONSTRATED IN THE PAST THAT THEY WANT FREEDOM OF CHOICE

AS TO WHICH DOCTOR TREATS THEM - AND THEIR FAMILIES - IN

A PUBLIC HOSPITAL, AND FOR TREATMENT IN PRIVATE HOSPITALS.

THE TABLE AT ATTACHMENT 'C' CLEARLY DEMONSTRATES THIS FACT.

..5/,

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FAMILIES WITH INCOMES GREATER THAN $190 PER

WEEK WANTING THE CHOICE OF DOCTOR IN PUBLIC

HOSPITALS WOULD BE WORSE OFF -UNDER LABOR'S PLAN;

- WITH AN INCOME OF $190 PER WEEK FAMILIES

WOULD NEED TO PAY $6.78 PER WEEK UNDER

THE A.L.P. SCHEME COMPARED WITH $6.70

. UNDER THE GOVERNMENT SCHEME;

- SIMILARLY, SINGLE PEOPLE WITH·INCOMES

GREATER THAN $110 PER WEEK WOULD BE

WORSE OFF - A SINGLE PERSON EARNING

$110 PER WEEK WOULD PAY $3.57 PER WEEK COMPARED WITH $3.35 UNDER THE

GOVERNMENT'S SCHEME.

PENSIONERS AND LOW INCOME EARNERS USING PRIVATE MEDICAL SERVICES WOULD BE ADVERSELY AFFECTED UNDER

THE A.L.P. SCHEME;

- AT PRESENT THESE PERSONS RECEIVE 85

PER CENT OF THE SCHEDULE FEE WITH A

MAXIMUM OF $5 FOR ANY ONE SERVICE;

- UNDER THE A.L.P. PROPOSAL PENSIONERS .

WOULD RECEIVE 85 PER CENT BUT WOULD

FACE A PERSONAL CONTRIBUTION OF UP '

TO $10.00 FOR ANY ONE SERVICE,

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, THE A.L.P. SCHEME WOULD DENY PEOPLE THE RIGHT

TO TAKE OUT MEDICAL INSURANCE TO COVER THE

GAP BETWEEN 85 PER CENT OR $10 MAXIMUM AND

THE SCHEDULE FEE.

BURGEONING GOVERNMENT EXPENDITURE AT THE EXPENSE OF THE PRIVATE SECTOR

LABOR'S HEALTH PLAN IS DESIGNED TO SOCIALISE MEDICINE

AND WITH THIS IT BRINGS INHERENTLY THE DANGERS OF A

FALL OFF IN THE EXISTING HIGH QUALITY OF CARE. THE

NUMBER OF PRIVATE HOSPITAL BEDS IS VERY LIKELY TO

DECREASE WITH THE RESULT THAT THE COMMUNITY WOULD LOSE

THE RIGHT TO CHOOSE BETWEEN A PRIVATE OR PUBLIC HOSPITAL.

HOSPITALS CONSUME BY FAR THE GREATEST AMOUNT OF RESOURCES

ALLOCATED TO HEALTH CARE. THEY ARE EXPENSIVE INSTITUTIONS

TO RUN. IN MANY CASES THEY ARE NOT PHYSICALLY LOCATED

TO ENSURE EASY ACCESS BY.THE COMMUNITY THEY SERVICE, NOR

DO THEY NECESSARILY PROVIDE THE TYPES OF SERVICES REQUIRED

BY THAT COMMUNITY. MANY PUBLIC HOSPITALS COMPETE WITH

OTHERS IN AN ATTEMPT TO PROVIDE ALL SERVICES WITHOUT ANY

REGARD TO DUPLICATION; NEEDS; PRIORITIES OR COSTS.

- 6 - .

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THE COMMISSION OF INQUIRY INTO THE EFFICIENCY AND

ADMINISTRATION OF HOSPITALS FOUND THAT THERE WAS

WASTE AND INEFFICIENCY IN THE PUBLIC HOSPITAL

SYSTEM. THE FEDERAL COALITION GOVERNMENT HAS ACTED

RESPONSIBLY IN ITS HEALTH POLICY TO BRING ABOUT

EFFICIENCIES IN THE PUBLIC HOSPITAL SYSTEM. YET

THE A.L.P. WISHES TO TURN BACK THE CLOCK AND RETURN

AUSTRALIA TO THE EXPENSIVE HEALTH SYSTEM THAT THE LABOR

PARTY WAS PREVIOUSLY ASSOCIATED WITH.

THE RESOURCES OF THE PUBLIC HOSPITAL SYSTEM WOULD BE

SERIOUSLY STRAINED - THEREBY DELAYING ACCESS AND

CREATING QUEUES WITH THE POTENTIAL FOR REDUCED QUALITY

OF CARE - UNLESS THE A.L.P. WERE TO PROVIDE THE

SUBSTANTIAL ADDITIONAL FUNDS NEEDED TO UNDERWRITE THE

EXPANSION OF THE PUBLIC SECTOR ITS POLICIES PROMOTE;

. THIS WOULD LEAD TO EVEN GREATER TAXES UNDER

LABOR AND/OR THE PROMOTION OF INFLATION;

. TO THE DETRIMENT OF ALL AUSTRALIANS. .

HEALTH COSTS WOULD RISE MARKEDLY.

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THIS GOVERNMENT'S HEALTH FUNDING ARRANGEMENTS ARE

DESIGNED TO ENSURE THAT THE STATES TAKE UP THEIR

PROPER CONSTITUTIONAL RESPONSIBILITIES FOR THE

PROVISION OF HEALTH SERVICES AND TO SEEK TO EFFECT

EFFICIENCIES IN THEIR PUBLIC HOSPITAL SYSTEMS. THIS

POLICY IS WORKING AS SHOWN BY RECENT ACTIONS BY SOME

STATES.

IN FACT IF THE FEDERAL GOVERNMENT HAD NOT MOVED TO

CONTROL THE EXCESS OF HOSPITAL FUNDING UNDER MEDIBANK

INTRODUCED BY THE PREVIOUS LABOR GOVERNMENT AND

INTRODUCED ITS NEW HEALTH SCHEME THE A.L.P. IN NEW

SOUTH WALES WOULD HAVE HAD NO INCENTIVE TO INQUIRE

INTO ITS HEALTH SERVICES OR TO RATIONALISE ITS HOSPITAL

BEDS.

WITH THE LEAD GIVEN BY THE-FEDERAL GOVERNMENT, NEW

SOUTH WALES MAY YET BE ABLE TO ESTABLISH EFFICIENCY IN

ITS HOSPITALS SYSTEM. ·

..9/

THE GOVERNMENT'S RECORD SPEAKS FOR ITSELF - HEALTH

EXPENDITURE BY AUSTRALIANS (THROUGH TAXES, PREMIUMS

AND CHARGES) INCREASED BY 31 PER CENT PER YEAR UNDER

LABOR, COMPARED WITH ABOUT 12 PER CENT UNDER THE

GOVERNMENT; .

. COMMONWEALTH HEALTH EXPENDITURE MORE THAN

TREBLED UNDER LABOR, WHEREAS THE GOVERNMENT

HAS HELD EXPENDITURE INCREASES TO AN AVERAGE

OF ABOUT 9.5 PER CENT PER YEAR - LESS THAN

THE INFLATION RATE.

LABOR'S PLAN HAS A HEAVY EMPHASIS ON ACCESS TO PUBLIC

HOSPITALS. IN DOING SO IT ENCOURAGES USE OF EXPENSIVE

PUBLIC HOSPITALS WHEN EFFICI ENT,ECONOMICAL GENERAL

PRACTITIONER SERVICES ARE AVAILABLE IN THE COMMUNITY;

. IT HAS BEEN CLEARLY DEMONSTRATED THAT GENERAL

PRACTITIONER CONSULTATIONS RESULT IN

PROPORTIONATELY FAR FEWER REPEAT CONSULTATIONS,

REFERRALS TO SPECIALISTS, BLOOD TESTS, X-RAYS

AND ADMISSION TO HOSPITALS THAN DO CONSULTATIONS

CONDUCTED IN HOSPITAL OUTPATIENTS AND CASUALTY

DEPARTMENTS.

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10 -

THERE ARE INHERENT DISADVANTAGES IN A MONOPOLISTIC

HEALTH FINANCING SYSTEM WHICH WOULD RESULT FROM

LABOR'S SCHEME;

. IT WOULD NOT HAVE TO COMPETE IN TERMS .OF

MANAGEMENT EFFICIENCY AND CONTRIBUTION

RATES COULD BECOME LESS ORIENTED AND LESS

SENSITIVE TOWARDS THE NEEDS OF RECIPIENTS

AND PROVIDERS OF HEALTH SERVICES.

THERE WOULD BE ADDITIONAL COSTS INVOLVED IN ESTABLISHING

A NEW GOVERNMENT INSURANCE FUND BY LABOR.

. IT IS ESTIMATED THAT THIS COULD BE AS MUCH

AS $60 MILLION

WHERE WOULD LABOR'S PROPOSAL LEAVE THE PRIVATE HEALTH

INSURANCE FUNDS AND THE PEOPLE THEY EMPLOY?

. BY SEVERELY LIMITING THE INVOLVEMENT OF

PRIVATE FUNDS TO HOSPITAL COVER WITH THE

ABOLITION OF PRIVATE MEDICAL INSURANCE,

THE VIABILITY OF THEIR FUTURE OPERATIONS

MUST BE CALLED INTO QUESTION AND THE JOBS

OF THE THOUSANDS OF PEOPLE THEY EMPLOY

MUST BE JEOPARDIZED.

THIS SITS VERY ODDLY AGAINST LABOR'S STATED CLAIMS TO BE

CONCERNED ABOUT THE UNEMPLOYED.

. .11/

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QVERSERVICING AND FRAUD

THE A.L.P.'S POLICY OF PROMOTING BULKBILLING WOULD

FACILITATE FRAUD AND OVERSERVICING;

. IT WOULD TAKE OUT OF THE HANDS OF THE PATIENT

THE KNOWLEDGE OF THE HIGHER COSTS THAT WOULD

BE ASSOCIATED WITH THE A.L.P. HEALTH PLAN.

NOR WOULD THE PATIENT BE AWARE OF THE COSTS

BEING GENERATED AS IS THE CASE UNDER THE

FEDERAL COALITION HEALTH POLICY;

. INCREASED UTILIZATION RATES WOULD BE INEVITABLE;

. LABOR'S OBJECTIVE OF DISCOUNTING FEES FOR

INCREASED VOLUME OF SERVICES PROVIDED, COULD

ACTUALLY PROMOTE OVERSERVICING SHOULD SOME

DOCTORS SEEK TO MAINTAIN THEIR INCOME LEVELS.

THE GOVERNMENT'S HEALTH ARRANGEMENTS ENCOURAGE THOSE

THAT CAN PAY TO ACCEPT GREATER PERSONAL RESPONSIBILITY

FOR THEIR HEALTH COSTS THROUGH THE APPLICATION OF THE

USER PAYS PRINCIPLE.

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12 -

EXPERIENCE WITH THE ORIGINAL MED IBANK SHOWED THAT

ANY SCHEME BASED ON TAXATION FOSTERS THE NOTION

THAT SERVICES ARE SOMEHOW PROVIDED FREE AND THIS

EFFECTIVELY DIMINISHES INCENTIVES FOR RESTRAINT

IN THE UNNECESSARY USE OF THOSE SERVICES.

THIS IS PRECISELY THE POSITION THAT THE LABOR PARTY

WANTS AUSTRALIA TO RETURN TO.

L A B O R S SCHEME HASTILY CONCEIVED AND POORLY RESEARCHED

. BY MAKING THE USE OF PUBLIC HEALTH FACILITIES CONDITIONAL ON THE ASSURANCE OF FEE RESTRAINT, LABOR'S POLICY MAY BE STRONGLY CHALLENGED BY THE MEDICAL PROFESSION.

. IN RELATION TO QUEENSLAND, RESIDENTS WHO ARE

ALREADY PAYING THROUGH TAXATION AND OTHER

MEASURES FOR THEIR FREE HOSPITAL SYSTEM WOULD

BE REQUIRED TO PAY THIS ADDITIONAL TAXATION

LEVY AND RECEIVE NO ADDITIONAL HOSPITAL BENEFITS.

DR L.·EDWARDS WAS QUOTED AS SAYING: '

'...IF LABOR HAD THE OPPORTUNITY TO IMPLEMENT

ITS 0.75 PER CENT HEALTH INSURANCE LEVY ON

TAXABLE INCOMES, QUEENSLANDERS WOULD PAY

DEARLY FOR A SERVICE WHICH IS ALREADY PROVIDED

FREE'. (BRISBANE COURIER MAIL, 8.2.82)

. .13/

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IN THEIR APPLICATION OF THE LEVY NO MENTION HAS BEEN

MADE AS TO WHAT LABOR PROPOSES TO DO IN REGARD TO:

. SEPARATED PEOPLE WITH DEPENDANTS;

, AUSTRALIAN TAXPAYERS OVERSEAS;

. SERVICEMEN AND THEIR FAMILIES;

, VETERANS AND THEIR FAMILIES; AND

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OVERSEAS VISITORS TO AUSTRALIA

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COMMUNITY HEALTH PROGRAM, SCHOOL DENTAL SCHEME AND NURSING HOME BENEFITS

LABOR PROPOSES TO RESTORE THE REAL LEVELS OF FUNDING

FOR THE COMMUNITY HEALTH PROGRAM TO THOSE THAT

EXISTED IN 1975;

. HOWEVER COMMONWEALTH AND STATES EXPENDITURE ON

THE COMMUNITY HEALTH PROGRAM IN 1981/82 WILL,

ASSUMING THAT THE STATES SPEND THE FUNDS

PROVIDED BY THE COMMONWEALTH AND RETAIN THEIR

PREVIOUS COMMITMENTS, BE AT LEAST $33 MILLION

MORE THAN THE PRESENT DAY VALUE OF THE

COMBINED CONTRIBUTION IN 1975/76.

THE LABOR SCHEME MAKES NO MENTION OF THE COMMONWEALTH

FUNDING OF THE SCHOOL DENTAL SCHEME FOR WHICH $23 MILLION

WAS PROVIDED BY THE GOVERNMENT IN 1981/82 THROUGH GENERAL

REVENUE GRANTS OR FOR THAT MATTER THE NURSING HOME BENEFIT

FOR WHICH THE GOVERNMENT WILL BE SPENDING APPROXIMATELY

$600 m i l l i o n in 1981/82.

. DOES THE LABOR PARTY PROPOSE TO ABANDON THESE SCHEMES?

THIS IS FURTHER PROOF OF THE LABOR PARTY'S INABILITY TO

PROPERLY COST THEIR HEALTH POLICY. IT IS EASY TO COME

UP WITH A CHEAP SCHEME WHEN YOU LEAVE MANY OF THE.HEALTH

SERVICES CURRENTLY PROVIDED OUT OF IT.

. .15/

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THE GOV E R NM E N TS HEALTH POLICY IS A RESPONSIBLE ONE WHICH

TAKES CARE OF ALL AUSTRALIANS AND PROTECTS THOSE IN SPECIAL NEED

THE FRASER GOVERNMENT'S HEALTH POLICY PROTECTS THOSE

PEOPLE IN GENUINE NEED BY PROVIDING FOR FREE PUBLIC

HOSPITAL AND. B U LKBTLLE^M'ED I CAL; SERVICES :TO: _

. HOLDERS OF PENSIONER HEALTH BENEFIT AND HEALTH

BENEFIT CARDS;

. HOLDERS OF HEALTH CARE CARDS-* WHICH INCLUDE

THE FOLLOWING GROUPS OF PEOPLE:

- MOST UNEMPLOYED PERSONS; .

- NEWLY ARRIVED M.IGRANTS AND REFUGEES;

. - LOW INCOME EARNERS; AND

:- THE DEPENDANTS OF THE ABOVE GROUPS.

UP TO THREE MILLION PEOPLE - OR OVER 20 PER CENT OF THE POPULATION - ARE PROTECTED IN THIS WAY. MOST OF THESE PEOPLE RECEIVE THEIR COVER AUTOMATICALLY .

. .16/

THE GOVERNMENT'S SCHEME ENSURES THAT THOSE PEOPLE WHO

CANNOT REASONABLY BE SAID TO BE IN GENUINE NEED

CONTRIBUTE TOWARDS THEIR HEALTH COSTS WHILE, AT THE

SAME TIME, BRINGING THE COST OF INSURANCE WITHIN THE

REACH OF THE AVERAGE AUSTRALIAN FAMILY THROUGH THE

PROVISION OF SIGNIFICANT SUBSIDIES FUNDED THROUGH THE

PROGRESSIVE TAXATION SYSTEM.

BASIC HEALTH INSURANCE - AFTER ALLOWING FOR THE TAX . REBATE - IS NOW CHEAPER FOR HOST AUSTRAL IAHS THAN

vTT; WAS PR 10 R TO SEPTEMBER, 1981.

- 36 - ·

THE GOVERNMENT'S POLICY IS PROMOTING EFFICIENCY IN

PUBLIC HOSPITALS BY MAKING THE STATES TAKE UP THEIR

FULL CONSTITUTIONAL RESPONSIBILITIES FOR THE PROVISION

OF HEALTH SERVICES.

THE INVALUABLE ROLE PLAYED BY THE PRIVATE HEALTH CARE

SECTOR, ESPECIALLY PRIVATE HOSPITALS, IS ENHANCED UNDER

THE GOVERNMENT'S POLICY.

IT ENSURES THAT USERS AND PROVIDERS OF HEALTH SERVICES

ALIKE ARE AWARE OF THE HIGH COST OF HEALTH CARE AND

INCORPORATES MEASURES DESIGNED TO PREVENT OVERSERVICING

AND FRAUD BY DOCTORS. .

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IT IS BOTH EQUITABLE - THE SIGNIFICANT GOVERNMENT

SUBSIDIES PROVIDED ARE FUNDED THROUGH THE PROGRESSIVE

INCOME TAX SYSTEM AND THE TAX REBATE OF 32 CENTS IN

THE DOLLAR MEANS MORE, RELATIVELY,TO A PERSON ON

$12,000 THAN ONE ON $25,000 - AND RESPONSIBLE THROUGH ACTION TO PROMOTE GREATER ACCOUNTABILITY AND AWARENESS

BY BOTH USERS AND PROVIDERS OF HEALTH SERVICES;

. AND PROVIDES.A VERY HIGH DEGREE OF FREEDOM OF CHOICE.

THE GOVERNMENT BELIEVES THAT WELFARE ASSISTANCE IN THE

FORM OF FREE HEALTH CARE SHOULD ONLY BE PROVIDED TO

THOSE WHO CAN REASONABLY BE REGARDED AS BEING IN GENUINE

NEED.

WHEREAS THE A.L.P.'S, POLICY OF PROMOTING BULKBILLING

WILL FACILITATE FRAUD AND OVERSERVICING;

. THIS GOVERNMENT HAS TAKEN FIRM STEPS TO

CONTAIN UNNECESSARY EXPENDITURE ON HEALTH

AND IS PAYING PARTICULAR ATTENTION TO

OVERSERVICING AND FRAUD, WITH FURTHER

STRONG MEASURES TO BE INTRODUCED THIS YEAR;

..18/

. BY CONTRAST; THE WHITLAM LABOR GOVERNMENT

TOOK LITTLE ACTION TO STOP OVERSERVICING

AND FRAUD, WHILE THE INTRODUCTION OF ITS

MED IBANK SCHEME BROUGHT ABOUT A MAJOR

EXPLOSION IN HEALTH COSTS, ·

LABOR'S POLICY A THREAT TO THE NATIONAL INTEREST

- 18 -

THE GOVERNMENT IS CONCERNED TO PREVENT HEALTH EXPENDITURE

UNNECESSARILY ABSORBING AN EXCESSIVE PROPORTION OF THE

NATION'S RESOURCES.

LABOR'S POLICY, ON THE OTHER HAND; WOULD LEAD INEXORABLY

TO A BURGEONING OF PUBLIC EXPENDITURE IN THE HEALTH CARE

AREA;

. THIS WOULD ADD A HEAVY TAX BURDEN TO TAXPAYERS -

ON TOP OF THE LEVY (WHICH ITSELF IS EFFECTIVELY

A TAX) THEY WOULD BE COMPELLED TO PAY - OR WOULD

HAVE AN EXPANSIONARY IMPACT.ON POTENTIAL

GOVERNMENT DEFICIT.

IT WOULD BE AGAINST THE INTERESTS OF ALL AUSTRALIANS TO

BE FOOLED BY WHAT MAY AMOUNT TO A SUPERFICIALLY

ATTRACTIVE PROPOSAL; BUT IN FACT WOULD BE VERY COSTLY AND

WOULD ABANDON THE SENSIBLE AND RESPONSIBLE PRINCIPLES

EMBODIED IN THE GOVERNMENT'S HEALTH POLICY.

..19/

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ONE WONDERS HOW LONG THIS IRRESPONSIBLE HAYDEN HEALTH

PLAN IS GOING TO BE OFFICIAL LABOR POLICY:

. THE MUCH HERALDED AND PUBLICISED FAMILY

HEALTH PLAN ANNOUNCED ABOUT TWO YEARS

AGO CAME TO A SHORT AND TIMELY END WHEN '

THE SAME ARCHITECTS OF THIS PLAN REALISED

HOW HASTILY CONCEIVED AND POORLY RESEARCHED

IT WAS.

000OOO000

Cost of A.L.P.'s Proposals "A"

Labor Dept, of Health

Funding Estimates Estimates (a)

$m $m

0.75% Levy 590 620

Tax rebate - "Conversion" 660 470 (b)

into direct benefits Reduction in Commonwealth 80 80

subsidy to reinsurance pool

TOTAL 1330 1170

Difference A.L.P. will need to cover ................... ......... $16 Om

(a) 1981 - 1982 figures.

(b) Based on estimated fund membership as current contribution r a tes. at September 1981 and

Labor Dept, of Health

Outlays

Additional cost of providing 85% medical benefit .

Estimates $m 710

Estimates

. . · $m

708 (b) (c)

Additional hospital funds to States

520 692 (c) (d)

Increased- subsidies to ~ private hospitals .

30 36

Increased additions to community health funding .

20 19 (f)

Extension of pharm­ aceutical benefits 30 60 (g) .

Administrative expenses 20 20 (e)

TOTAL 1330 1535

Difference A.L.P. will need to cover ....... $205m ,

(a) 1981 - 82 figures.

(b) Assumes no change in overall utilisation rates or the Schedule fee.

(c) Assumes that hospital insurance levels drop from estimated fund membership as at November 1981 - 70% to level of 53% immediately prior to the announcement of the new policy in April 1981 which provided strong encouragement to take

out health insurance. .

■(d) Assumes that total loss of revenue due to A.L.P. proposals would be fully offset by additional Commonwealth funding.

(e) No allowance has been made for additional outlays on capital equipment and buildings. For 1975/76 the Whitlam Labor Government provided $107.0 million for the capital assistance for public hospitals. And it is estimated that establishment costs for a

new public fund would be up to $60 million.

(f) Figure based on Labor's plan to maintain real level of Commonwealth funding provided in 1975. Additional Commonwealth funding would be necessary to cover Labor's plans to provide "specific purpose grants

for particular initiatives in community health". Still further funds could be necessary to cover Labor's plan to guarantee automatic entitlement for all Australians to medical services without direct charge at community health centres; however

insufficient detail is available to cost this proposal.

(g) The Department of Health estimates that $30 million would be necessary to provide "free" pharmaceutical benefits to all unemployed persons. Insufficient details have been provided to enable a proper

costing of all aspects of Labor's proposals in this area. However, up to an additional $30 million annually could be necessary to provide drugs to the chronically ill, at a cost below the present level of patient contribution.

COST OF HAYDEN HEALTH SCHEME

Outlays

ALP Estimates

1. Total Medical Benefit Payments

@ 85% with $10 gap

(Scheduled fee cost $1,750m benefit av. 88%) $1,560m

(Derived from Health Department, Annual Report 1980-81, p. 247)

Schedule fee cost 1979-80 for 92% of insurable services $1,157.1

Therefore, full cost = $1,258m

Plus, uninsured services $ 120m

Plus, fee increases, population increase, and usage increase 1980-81 and 1981-82 (24.7%)= $ 342m

$1,72 0m

Allowance for fee drift $ 30m

Less full year value of present medical benefits (Budget Paper Paper No. 1 1981-82 p.85) $ 850m

Net additional payment $ 710m

Hospital Payments

Payments to States

Existing Hospital Grants, plus

(a) Loss of revenue by reducing intermediate and private ward fees by $40 a day

9m days at $40 per day* $ 360m

(b) Loss of revenue, from expected 2m-bed days transfer to public** $ 80m

Estimates Supplied by Department

$1,567m

($1,683m less $116m savings associated with charges in hospital insurance and .community health centres)

$1,157. 5:

$l,266m

$ 113m

$ 4.13m

$1,792m

$ 154m

$ 85 9m

$ 708m

(8.55 days x $40pd) $ 342m

This figure includes estimates of losses of revenue plus increased $ 210m costs of hospitals in providing the additional

"public" medical services.

2.

(c) Loss of out-patient fee revenue** $ 80m $ 140m

$ 520m $ 692m

Net additional payment

* Target figures for private bed days in public hospitals provided by the Commonwealth Government to the States, May 1981.

** Commonwealth Government estimate of effects of present scheme provided to States, 1981

3. Payments to private hospitals to raise benefits to uniform $30 per day (4.2m at $7 per day) $ 30m $ 36m

Payments to restore health centre financing to 1975-76 levels $ 20m . $ 19m

Extension of pharmaceutical benefits $ 30m $ 60m

Additional administrative expenses $ 20m $ 20m

Total net additional payments $1

,330m $1 ,535

Revenue

ALP Estimates

Estimates Supplied by Department

1. Levy yield at .75% of

taxable income with exemptions as provided. Based on Taxation Statistics attached to '

1981-82 Budget Papers. $ 590m . $ 620

2. Full year value of present tax concessions. Based on Budget Papers N o . 1, .

1981-82. $ 660m $ 470m

3. Reduction of reinsurance '

pool subsidy. ($50m results from reducing private bed fees from $80 to $40 per day). $ 80m . " $ 80m

$1,330m $1,170m

B"

THE COST OF PRIVATE INSURANCE UNDER LABOR

In relation to medical and hospital costs, Labor's

r"' basic plan will only provide medical benefits equal

to 85 per cent of the Schedule Fee plus public

hospital accommodation and inpatient and outpatient

treatment by hospital and sessional doctors.

Those persons wishing to choose the doctor they want

to treat them - or their families - in public hospital

would need to take out separate private hospital

insurance under Labor1s Plan.

Labor estimates that this extra cover will cost $3

per family per week.

The Department of Health estimates that the cost of

such insurance could be up to $4.50 per week in New

South Wales per family under Labor.

Labor's "estimate" of the cost of "private insurance"

would appear to have disregarded the following:

. the higher charge for shared ward accommodation

in N.S.W. ($96 per day);

. the need for a higher benefit to cover the

cost of single room accommodation in public

hospitals ($132 per day in N.S.W. and

$110 per day in most other States);

. the reduction in Labor's proposed contribution

to the Reinsurance Trust Fund - would increase

insurance costs by 50 cents per week;

. the erosion of the community rating principle

due to a large number of young health people

dropping their insurance cover.

COST OF PRIVATE HEALTH INSURANCE UNDER LABOR

• V #

"C"

FAMILY INCOME LEVY INSURANCE* TOTAL PRESENT AVE. :

$ PER WEEK 1.2%

$ PER WEEK

? PER WEEK COST

$ PER WEEK PREMIUM AFTER TAX REBATE

190 2.28 4.50 6.78 6.70

200 2.40 4.50 6.90. 6.70

210 2.52 . 4.50 7.02 6.70

220 2.64 4.50 7.14 6.70

230 2.76 4.50 7.26 6.70

240 2.88 4.50 7.38 6.70

250 3.00 4.50 7.50 6.70

300 3.60 4.50 8.10 6.70

350 4.20 4.50. 8.70 6.70

400 4.80 4.50 9.30 6.70

450 5.40 4.50 9.90 6.70

500 6.00 4.50 10.50 6.70

550 6.60 4.50 11.10 6.70

600 7.20 4.50 11.70 6.70

700 8.40 4.50 12.90 6.70

800 9.60 4.50 14.10 6.70

900 10.80 4.50 15.30 6.70

1,000 12.00 4.50 16.50 6.70

1.150 13.80

(max)

4.50 18.30 6.70

1,200 13.80 4.50 18.30 6.70

* in N.S.W

• tf >

SINGLE PERSON LEVY INSURANCE* TOTAL

INCOME $ PER WEEK

1.2%

$ PER WEEK

$ PER WEEK COST

LABOR

110 1.32 2.25 3.57

120 1.44 2.25 3.69

130 1.56 2.25 3.81

140 1.68 2.25 3.93

150 1.80 2.25 4.05

200 2.40 2.25 4.65

250 3.00 2.25 5.25

300 3.60 2.25 5.85

400 4.80 2.25 7.05

500 6.00 2.25 8.25

PRESENT A V E . INS. PREMIUM AFTER TAX REBATE

3.35 3.35 3*. 35 3.35 3.35 3.35 3.35 3.35 3.35 3.35

* in N.S.W