Extend Medicare to cut waiting lists, up competition

Extending Medicare to include private hospitals could lower Australians' reliance on private health insurance and reduce waiting lists, a health economics expert says. Professor Jim Butler, Director of the Australian Centre for Economic Research on Health (ACERH) based at ANU, says that opening up private hospitals to more patients will have a double benefit: reducing queues for public hospitals, and making public and private hospitals more competitive.

In his analysis, a Hospital Benefits Schedule funded by the Commonwealth and not the states would be created to enable patients to use their publicly funded health service benefit in private hospitals.

"If a patient has to have a hip replacement they would be given the cost of that service being provided in a public hospital and put it towards the cost of the same operation in a private hospital," Professor Butler said. "That might mean they then pay a bit more for the service, but the operation may be performed sooner."

Most importantly, access to hospital services would improve, he said.

"At the moment, only 45 per cent of the population has cover through private health insurance against private hospital charges. Under this system, 100 per cent would have insured access to them. It would shift some of the funding responsibility to the taxpayer, but that burden could be easily absorbed by increasing the Medicare levy, for example from 1.5 per cent to 2.5 per cent, and reducing grants to the states to reflect the transfer of financial responsibility for hospitals to the Commonwealth."

Professor Butler said the Commonwealth would act in a funding capacity only. Ownership and management of public hospitals would still be the responsibility of the states, and the new funding arrangement could easily graft onto the existing Medicare system.

A possible area of difficulty with the new scheme would be managing how doctors working in public hospitals would be paid. Currently specialists are largely salaried or sessional, but private hospital doctors operate under a fee-for-service model. Professor Butler said that moving to a fee-for-service payment model across both types of hospitals would result in the same economic incentives for doctors to work in either type of hospital, but patients in public hospitals would then face out-of-pocket expenses for medical fees in excess of the Medicare rebate.

Source: Research Australia