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Road map for Australian health care reform - Part II

By Fred Hansen - posted Tuesday, 12 August 2008


Russell Schneider, previous head of the Australian Health Insurance Association predicts the demise of Medicare unless a fundamental transition from funding to purchasing health care is accomplished (ACHR research paper Nov. 2006). It would enable competition between hospitals and other providers on outcome and finally on prices. However, his proposal of managed competition within preferred provider organisations is not compatible with consumer choice.

Australia deserves a market-based, efficient health delivery system with private insurance and arranged along the lines of subsidiary federalism and consumer choices. Universal health insurance and state run hospitals are incompatible with the rapid innovation that is required to meet the challenges of the 21st century.

Over the last century the average global life expectancy has roughly doubled, from 30 to 60 years and human resources have pretty much replaced natural resources as drivers of the economy. This is exactly why health care has become such a big issue in all developed countries.

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Innovation, excellence and global competition in the health care industry are becoming part of the fast growing knowledge-based “people’s economy”, which might give Australia the edge over the Asian Tigers. However, this very advantage could be jeopardised by a meltdown of Medicare caused by the overwhelming burden of retiring baby boomers if no action is taken. That’s encapsulated in ANU Professor Ross Garnaut’s prediction on demography being the route to success in the 21st century.

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About the Author

Dr Fred Hansen is a science writer having published mostly in Germany and the UK. He came to Melbourne a year ago and has published some articles in the IPA Review. He also has a regular blog at the Adam Smith Institute in London. Dr Hansen was a green MP in the state parliament of Hamburg in Germany in the mid-1990s and chaired the science select committee there.

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