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Privatise Medicare and public hospitals.

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Whilst selling Medibank Private will achieve a reduction in Private Health Insurance costs, the real need is to include the services of the Health Insurance Commission or Medicare as we know it in the privatisation package.

Medicare is a form of compulsory insurance that creates significant distortions in the health insurance market because it is considered to be free and adequate for those, usually of younger years, who do not expect to use its hospital services other than in an emergency where waiting lists do not apply.

This removes the non or low claim premium income so essential to all insurance operations to provide a universal service at affordable premium costs.

Put simply, unlike a house burning down, claims on a private health fund are highly predictable in various age profiles and, as a consequence, the private sector gets all the high risk clients, resulting in an escalation of premium rates.

Were the Health Commissions clients including GP services included in the private market, and Australian Government funding directed to a targeted premium subsidy programme, premiums would drop and those on the lowest income or age pensions could be subsidised within existing Government Budgets up to 100%, as could children.

Were State Governments to also privatise their hospitals and divert their expenditures to private health insurance subsidies the following reforms would be automatic.

All hospitals would be paid on a fee for service basis, meaning patient services would be profitable, not a liability, as applies to a public hospital administration tied to a fixed lump sum annual budget, in other words patients would be welcome.

Waiting lists are openly conceded to be the mechanism of budget management amongst public health officials i.e. you budget for so many prosthesis stores for the year and when they run down you limit access for public patients accordingly.

There is ample evidence of the more efficient use of hospital infrastructure and staff by private hospital management, one example in WA was of a hospital sold by the Hawke Government eliminating 10 months long waiting lists by the simple act of opening its operating theatres on the weekend.

GERALDTON - 23 Chapman Road (PO Box 1781) Geraldton WA 6530 Tel: (08) 9964 2195 Fax: (08) 9921 7990 ALBANY - Suite 5 Link Shopping Centre, Albany WA 6330 (PO Box 5077) Tel (08) 98426228 Fax (08) 98426006 CANBERRA - Suite R117 Parliament House, Canberra ACT 2600 Tel: (02)6277 4660 Fax: (02) 6277 8589

Australians and their Governments spent $78,598 million on health services during 03/04 or $3,931 per capita. These figures were up from $36,990 million and $2,082 respectively in 1993/94.

Of more concern is the relevant growth in that expenditure as a percentage of GDP, which has risen from 8.3% to 9.7% in the same decade, yet services have not improved. The Australian Government allocated $37,544 million in its 05/06 Budget of $206,081 million or 18.2% of total outlays - just how much longer can such growth continue without an effect on other important areas?

The Howard Government has introduced a 1% penalty Medicare levy rate for high income earners who do not privately insure, it has produced a lifetime cover initiative which penalises those who do not ensure by age 30 years And now pays a 30% to 40% private insurance premium subsidy to those who are rich and poor but no one is prepared to address the fundamental distortion of two parallel insurance schemes that compete on a totally slanted playing field to the extensive cost of the consumer, particularly in their role as tax payers.

* Source of figures AIHW - ABS as provided by Parliamentary Library and Budget Paper No. 1

Media contact: Alana Lacy 08 98 426228