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Carrot and stick approach to private health insurance harms health care reform.



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COUNCIL ON THE AGEING

 

MEDIA RELEASE

 

Carrot and stick approach to private health insurance harms health care reform

 

22 May 1998

 

“The government’s carrot and stick approach to encouraging private health insurance will halt the pace of real reform" acc ording to the Australian Consumers’ Association and the Council on The Ageing (COTA).

 

“Some health funds are now reaching agreements with hospitals and doctors to eliminate out-of-pocket costs and resolve the problems of multiple bills when health fund members claim - further carrots or sticks would be a disincentive for such reforms to spread”, said Sally Nathan, Senior Policy Officer at the Australian Consumers' Association.

 

In a joint health financing paper sent to the government last month, and publicly released today, the Consumers' Association and COTA highlight other ways the private funds could move towards long term stability, including the option of lifetime community rating, but outright reject the need for:

 

1. Tax exemptions for employers that offer private health insurance as a benefit to employees - in the US, where such tax exemptions exist, employee choice is often limited to one or two health funds and employees have lost sight of the price of fund membership as the cost of health care rises.

 

2. Further rebates to encourage people to take out private health insurance A CHOICE survey of over 6,000 subscribers last year found many were not encouraged by the carrots and sticks because health insurance premiums were seen as too expensive, and because out-of-pocket costs could not be controlled.

 

3. The lowering of the taxable income threshold for the 1% Medicare surcharge below the current $50,000 for singles and $100,000 for families.

 

“A tax penalty or incentive may encourage people to buy pr ivate insurance, but the risks are they will under-insure and use scarce income to buy a product they do not want”, said Denys Correll, National Executive Director of the Council on the Ageing.

 

“The tax penalty also undermines the concept of universality as it implies the poorer should use public hospitals and the richer the private system", said Mr Correll.

 

“People should have a right to choose to take out private insurance. But they should also be able to choose to stay in Medicare and give their support to a universal system - with one of the lowest levels of spending (as a % of GDP) in the OECD and where access is based on need not ability to pay” said Ms Nathan.

 

“Whether it’s tax penalties or exemptions for the big end of town - it represents the thin end of the wedge of the erosion of the Medicare system.”

 

“The alternative, one system for the rich and one for the poor, higher costs and a lot of people who get left out all together.”

 

For more information, contact:

Sally Nathan, Senior Policy Officer, Australian Consumers' Association on (02) 9577 3374 or 0411 788 076 or Denys Correll, National Executive Director, Council on the Ageing on (03) 9820 2655 or 0411 810 249.

 

To see a copy of the health financing paper, visit our website at www.choice.com.au or call (02) 9577 3333 to ask for a copy to be faxed.

 

 

 

LK