All consumers, with the possible exception of medical specialists and senior health fund executives, should welcome health minister Nicola Roxon’s announcement that she will reintroduce legislation to means test the private health insurance (PHI) rebate.
As an industry welfare measure, the rebate has undoubtedly been successful. However, as a health funding mechanism, this scheme is a disaster. Study after study has found that it has virtually no impact on fund membership and that the $4.5 billion spent annually on premium subsidies would deliver better health outcomes if used to directly fund health services.
The Labor Party knew this when its parliamentarians voted against the introduction of the rebate scheme in 1999. The planned reintroduction of the means testing Bill is a hopeful sign that Labor remembers why the rebate was a bad idea from the start.
Given the crucial role the Independents will have in determining the passage of this Bill through the lower house, it is vital that they understand how the rebate scheme short-changes rural communities.
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Currently, the 30% of Australians living in rural and regional areas contribute to the PHI rebate program via their taxes but do not receive the same level of access to private health care compared with people living in cities. This is due to the lack of private health care services across the majority of rural Australia. In fact, private hospitals are virtually unknown in regional areas, outside of a handful of major centres on the eastern seaboard.
The same applies to dentists and allied health professionals, such as physiotherapists and dietitians. Despite the poor oral health status of many rural and remote communities, it is almost impossible to find a privately practising dentist in the bush — unless, of course, they are in a top-end tourist resort on holiday from their inner-city practice down south.
The fact is that rural communities rely almost exclusively on the public sector to provide them with the health care they need. Having a blue-chip, fully paid-up, premium health insurance policy is of no use to someone in a rural area where there are no private health services available.
Means testing the rebate will have no negative impact on access to health care in the bush. In fact, reducing expenditure on this inefficient scheme will free up resources to spend on public health services in regional areas of need.
It is also important that the independents understand that PHI membership has little impact on demand for care in the public sector. This is an issue that Rob Oakeshott has previously raised in the context of changes to the PHI rebate.
Research indicates that private health fund membership is unlikely to change significantly as a result of means testing. If a small number of people drop their cover as a result of the changes, it is likely to be those at low-risk who have taken out cover to avoid tax penalties. These people are low level users of health services and their decision will not impact on demand for health care in either the public or private sectors.
If the Independents are sceptical of this finding, they need only consider the position of the Australian Healthcare and Hospitals Association — the peak national body for public hospitals and community health and aged care services. The AHHA supports the means testing of the rebate and has no concerns about any adverse impact on its members.
If the Independents are concerned about inequities in access to health care in rural areas and want to reduce the increasing stress on public hospitals, they should support the means testing Bill and use their voting muscle to wrangle some additional funding for public health services in rural and regional Australia. Every dollar we spend on the unfair and inefficient rebate scheme is one we cannot spend providing services to those Australians who need them most.
*Jennifer Doggett provides consultancy services to the Australian Healthcare and Hospitals Association.