Does the Australian Consumers’ Association really care about the
health of their customers, or are they on an anti-private sector,
Whitlamesque crusade to pour money into public

Time for the ACA to think of health consumers

Second Sealed – February 11, 2004

An advocate of health reform writes:

“The mis-named Australian Consumers’ Association is campaigning hard on Medicare, but has a curious approach to health reform.

It seems to think consumers are best served by public sector monopolies
– hence its involvement in Left alliances around the country to Defend
and Extend Medicare (which in practice means pouring more money into
public hospitals in the hope that waiting lists will get shorter).

Ideology seems to prevent its health spokeperson, Martyn Goddard, from
campaigning for the bleeding obvious – breaking the medical cartel’s
control over the supply of doctors and practitioners, removing public
handouts to cottage industry practitioners to prop up their businesses,
and allowing health resources to follow the patient rather than the

In defence of the Consumers’ Association

First Sealed  – February 12, 2004

By Andrew Dempster
Holder of a Medicare card

Your correspondent’s somewhat cryptic attack on the Australian
Consumer’s Association’s support for Medicare is also highly misplaced.

The ACA knows only too well that Australians hold Medicare very dear.
Despite its flaws it has provided excellent health outcomes for
Australians for 20 years now. Other countries would bend over backwards
to have a system like ours.

Why? We know from international comparisons that there is a clear
relationship between the total amount we spend on health and the
proportion of that expenditure which is drawn from the private sector.

The United States, which depends heavily on private funding, spends
more than 14% of its GDP on health. The health outcomes aren’t too bad
– if you can afford insurance, that is, and increasingly people find
that difficult.

On the other hand, Australia’s health system delivers even better
health outcomes for 9% of GDP. And here, everyone is insured, whether
they can afford it or not.

Australia’s example – together with those of other countries that
maintain national insurance schemes similar to Medicare – demonstrates
the power of a strong public system in keeping overall health
expenditures under control.

This is widely understood by health policy wonks. With the exception of
outfits like the highly self-interested Australian Health Insurance
Association (who not long ago pronounced “Patterson Doing a Great Job”
at  AHIA Media Releases), it’s hard to find an
interest group that backs an increase in private funding for our health

Keep up the good work,

Concerned Crikey subscriber Ian McAuley writes:

Crikey carried a story from an unnamed “advocate of health reform”
about the Australian Consumers’ Association and its policies on
Medicare. Crikey’s faceless advocate suggested that the ACA is on some
anti-private sector Whitlamesque crusade to pour money into public
hospitals, and is involved in a conspiracy with medical cartels to support supply side restrictions.

Although I am not a member of the ACA, I have done research for them in
health economics over the last 15 years.  From what I know of the
ACA, I can assure Crikey’s readers that the shadowy advocate you found
in a Collins Street car park has gone off half cocked.

First, far from opposing private hospitals, the ACA has consistently
argued that they should be put on a better funding base.  Its
disagreement is with using a high cost, oversubsidized, bloated
financial intermediary (private health insurance) to achieve
this.  Only 40 percent of money passing through private health
insurance makes it to private hospitals – the rest is dissipated on
ancillary services, excess “gap” payments to medical practitioners, and
to bureaucrats in the private health insurance industry. There is a
case for supporting private hospitals – the ACA has argued this case
for as long as I have known them.  There is no more of a case for
subsidizing private insurance, however, than there is for subsidizing
NAB’s currency trading.

Second, the ACA has argued strongly in public submissions against the
cartelization of medical supply.  Its submission to the Senate
last month made it clear that the fall in bulk billing was closely
related to tightening supply of medical practitioners. ACA has been a
consistent strong voice for competition – well before our politicians
pretended to discover competition in the mid eighties – and it has
often been at odds with those on the “Left” who have supported tariffs
and restrictive trade practices.

Third, it is the Government which has poured more money into the
system, through private insurance subsidies, without attending to real
resources. As any Eco 1 student knows, (but not our policy-makers), if
resources are fixed (by constraints on provider numbers and specialist
college cartels), the result is not relief of pressure, but price
inflation.  That’s why there’s price inflation in health care and
it’s why waiting lists are worse than before Howard started wasting
taxpayers’ money on subsidizing insurers rather than investing in
resources for public and private hospitals.

Having hung around Canberra for thirty years I’m fairly sure that our
bureaucrats don’t understand the difference between money and real
resources – they still think you can solve a problem by throwing money
at it. The old lefties threw public money at problems while this lot
throw private money at the same problems.  The consequences are
the same.

I suspect Crikey has been nobbled by someone posing as an “advocate of
health reform”, whose real concern is to protect the privileged
position of the subsidized financial sector – which has its fingers
deep into the health care till.  Spokespeople for private insurers
pretend that without private insurance there would be no private health
care.  When that nonsense is challenged, when economists and
consumer organizations point out that there ways to support private
hospitals without subsidizing a $800 million financial intermediary,
the insurers do all they can to discredit their critics.

Peter Fray

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