It’s unfortunate that the debate about Medicare Select has turned into a battle, along ideological lines, between advocates for the public and private sectors.

Medicare Select advocates argue for a greater involvement of third-party payers to introduce more competition and consumer choice within the health system. A report released today (funded by Medibank Private and written by Mary Foley, along with Christine Bennett and Just Stoelwinder), reiterates these arguments and outlines a plan to move towards the National Health and Hospitals Reform Commission’s recommendation for Medicare Select.

Opponents of Medicare Select argue that the public health system is already extremely efficient and that increasing the role of third-party payers will simply increase administrative costs without delivering better health outcomes. They point to the inefficient private health insurance rebate as an example of how health-care resources are wasted when they are funnelled through private sector funders.

Unfortunately no one is putting on the table an option to combine the best features of both proposals — a publicly funded universal health system that delivers choice, competition and flexibility for consumers.

Most health economists agree that the most efficient and equitable mechanism for funding health care is through progressive income taxation. There is no reason why we cannot retain this means of funding our health care while improving the way in which public health care subsidies are delivered in order to give consumers more choice and more control over managing their health-care costs.

A universal and publicly funded system should not mean a rigid and inflexible system. Before we move to a radical option, such as Medicare Select, it makes sense to explore how our existing public health system can adapt to maximise consumer choice as far as possible in order to meet consumers’ diverse needs, while supporting a more efficient use of health-care resources.

This could occur in several ways, including giving consumers the option of paying an excess for each non-emergency episode of public hospital treatment in return for receiving additional benefits, such as higher rebates for primary care services and/or goods and services currently not covered by Medicare or the PBS or lower safety-net thresholds. Excesses could be fixed at different levels with corresponding rebate levels for primary care services.

This would allow consumers to share some of the risk of incurring hospital-related expenses with the government, while supporting the choice of consumers to access cost-effective primary care services. The current entitlement of all consumers to free public hospital care would be maintained.

Public hospitals could also be allowed to charge co-payments for additional (non-medical) services to patients, such as private rooms and choice of doctor (while maintaining the existing entitlements to treatment with no out-of-pocket costs). Currently, people who require these options are generally only able to obtain them within the private hospital system. This is unnecessarily restrictive and reduces the benefits to consumers of public hospitals.

Allowing hospitals to charge co-payments for services such as this would give people increased choice within the public hospital system without compromising equity of access to care*.

If COAG is genuinely interested in moving beyond ideological-driven arguments to find reform options that meet the needs of consumers – rather than health interest groups – these proposals should be put on the table when it meets on the 7th December.

*These proposals are discussed in more detail in the Centre for Policy Development paper Out of Pocket

Jennifer Doggett provides consultancy services to the Australian Healthcare and Hospitals Association.

Peter Fray

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