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An iron clad guarantee rusts quickly

By Tim Woodruff - posted Thursday, 16 March 2006

For how much longer can Australians take readily available good health care for granted? Even urban areas are experiencing shortages of doctors and hospital beds. Will it get worse? What are the solutions?

How good is our health system? Figures from the Organisation for Economic Co-operation and Development (OECD) from 2003 show we have a life expectancy at birth of 80.3 years, the fifth in the world. It has increased from 77 years in 1990, and the increase is on a par with that of most comparable countries. We are 16th in terms of infant mortality, 5.2 (per 1,000 live births) compared to Iceland’s 3.0. We have managed this while spending US $2,699 per capita on health which is the 12th highest in the world, and as a percentage of GDP our spending is also 12th at 9.3 per cent.

Public spending constitutes 67.5 per cent of our health spending. The four countries whose public spending is less than 52 per cent all have life expectancies at least two years less than us and infant mortality over 6.1, and the US is one of these countries. So, compared to other countries our health system delivers good outcomes and spends the money efficiently. One might conclude therefore that with a system working this well, we shouldn’t be too worried about changes.


There are, however, other ways of looking at the available statistics. Figures (pdf file 805KB) from the Australian Institute of Health and Welfare show “health gains have not been equally shared across all sections of the population”. So although mortality rates are declining in all age groups at all levels of socio-economic status, the relative mortality rates in the most socio-economically deprived groups compared to the most advantaged groups are increasing. For example, in 1985-7, the mortality rate in males from the most disadvantaged aged 25-64 was 65 per cent higher than the most advantaged but by 1998-2000 that figure had risen to 75 per cent.

When one looks at the more regular users of the health system, there is evidence to suggest that many do not take for granted the ready availability of good health care. The Commonwealth Fund, a Harvard based international health research institute, performs surveys in various countries every few years. In 2005, an in-depth telephone survey of 750 Australians, with some evidence of chronic use of the health system in the community, showed that 34 per cent did not access health care because of cost. Forty six percent who needed a specialist consultation waited more than 4 weeks for the appointment, 19 per cent waited more than 4 months for elective surgery, and 17 per cent waited more than 4 hours to be seen in an emergency department. It would appear therefore that many Australians who use the health system regularly already do not take access for granted. The question is, will it get worse?

For those who have sufficient money, little will change, as is always the case. For most of those who already have problems with accessing the system, the answer is almost certainly, yes, it will get worse. The reason is not the workforce crisis. That is just one very significant contributing factor. The direction our health care system is taking, however, is the major factor which will lead to increasing inequity and increasing inefficiency.

From 1974, when Medibank (succeeded by Medicare) was introduced, until 1996, the Australian health system had been characterised by a very large public health insurance scheme which had aimed to provide universal affordable access to basic health care in an efficient and cost effective manner. The small pre-existing private health insurance system continued to supplement the public system.

In 1996, the direction changed. No longer was the aim to maintain and improve the public health insurance scheme. Instead, “choice” had to be championed and the private system expanded while maintaining a public system for those who were unable to afford the private fees. The publicly funded component of the system had to be seen as predominantly a “safety net” for those who were unable to afford the private system.

This change of direction however, has been gradual. Any abrupt change in direction would have been politically too dangerous. The benefits of private health care and choice needed to be sold to enough of the population with a mixture of carrots and sticks. Sufficient Australians needed to be convinced that the public system should be the “safety net”. Despite setbacks, the agenda continues, and we can expect to see an expansion of private health insurance cover to such things as private emergency departments, radiotherapy, dialysis, prescription drugs, and eventually everything.


One of the temporary setbacks to the agenda has been the issue of “safety nets”. The iron clad guarantee underpinning the Medicare safety net rusted very quickly, but much less publicised is the legislated guarantee that for the next four years the Pharmaceutical Benefits Scheme safety net will become harder to access each year. That’s the problem even with the very obvious “safety nets”, they are never safe from the treasury’s knife. But more important is to understand that the whole of the public health system will increasingly be seen as a “safety net”, as private fees become ever increasing components of medical services, and private health insurance is permitted and encouraged to step in to cover an increased range of services.

Inevitably, the privatisation of our health system and the transformation of the public system into the “safety net” will mean increasing inequity. Those who currently face barriers to access will find the barriers greater, and many who now manage will struggle as the financial bar is raised. Failure to pay medical bills is the single most common reason for personal bankruptcy in the privatised United States health system. That is the direction in which we are heading.

Workforce issues will be even more of an issue as privatisation increases. Already, despite very definite evidence of increasing workforce shortages across Australia, there are seldom significant delays even for elective surgery in private hospitals in major metropolitan centres. Next door in the co-located public institution, workforce shortages are usually one of many factors contributing to the delayed service.

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About the Author

Dr Tim Woodruff is Vice-President of the Doctors Reform Society.

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All articles by Tim Woodruff

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