Webdiary - Founded and Inspired by Margo Kingston

The Private Health Insurance RebateRip-off

When big government gets into bed with bigbusiness, they create an unholy alliance that really screws the taxpayer.

Australiahas an excellent public health system, among the best in the world. I do notbegrudge my tax money used to supporteither Medicare or our hospital system. I am angry, however, about my tax moneybeing spent to prop up a private insurance scheme. (To avoid confusion, it’sworth explaining that Medicare is not an insurance system, it is simply a taxfor a public service)

 Insuranceis a type of gambling. Both relate to paying relatively smaller amounts on thechance of a relatively high pay-out. In Lotto, if the pay-ins and pay-outs areadded up, the punter gets back about sixty cents on the dollar. With insurance,the punter gets back about 8o cents.

The psychology of the two is different,though. Lotto works on hope and excitement. Insurance works on fear andanxiety.

There is one rational argument forinsurance: to guard against a catastrophic, extremely rare event. The insurancepremium is so small that it makes better sense to insure. Otherwise, it makesbetter financial sense to self insure: put money aside for emergencies.

Isn’t something like a heart attack acatastrophic, extremely rare event? Actually, it’s not rare. It’s going tohappen to a fair number of us. In any event, even if I had private healthinsurance, I wouldn’t rush to the private hospital – I would rush first to ourlocal public hospital. Once it was no longer catastrophic, I may transfer tothe private hospital for better creature comforts.

I do use the private health system, fornon-life threatening issues, because of the public waiting time. Willingly payingfrom my own pocket. What I do object to is having to first fork out a premiumto the insurance companies.

And the additional paperwork I have to doin administering my insurance. When one is making several claims a year for GP,dental spectacles etc, it just becomes ridiculous. More often than not,there’ll be a couple of claims I’d just forget or not know about…

What about when I need a hip replacement,and the waiting time is 18 months? By then, I would have saved more than enoughfrom insurance premiums. Or, I may take a trip to India…

Another problem with insurance basedindustry structures is that it creates a bureaucratic closed shop that drivesprices upwards. An excellent example is car repairs. To the punter, its free,they may as well go for a deluxe solution. The repairer has a closed business,and prices start steadily going up. For the price of the repair, which flows onto the price of the insurance. One of the reasons for increased medical costsis that insurance schemes reduce the price lowering effects of free markets.

The whole rip-off is very well crafted. Itappeals to Labor, with their philosophy of big brother knows best, universalhealth, and taxing the wealthy. It appeals to the Liberals with the lure of taxrebates and support to the industry.

The argument that is made is that thepatients are diverted to the private sector, so it saves the public hospitalcosts. What really happens is clear when we look at the details. A procedure ina public hospital costs, say $500. If I go to the public hospital, the publichospital gets a Medicare rebate of $500 in its kitty. If I go to the privatehospital, it charges $1,000, of which it gets $500 as a Medicare rebate and$500 from the insurance company. The insurance company gets $600, $400 from mein premiums, and $200 from the government in subsidies.

More cunningly, it’s a state sponsoredtwo-tier health system. The upper tier is only for those who are wealthy enoughto afford private health insurance. General taxes pay for it in two ways,firstly by paying a part of the insurance, and secondly by collecting less taxfrom those who take out the insurance. I wonder how many of our MPs are in theupper tier.

If someone wants to get private healthinsurance, that’s their wish. I just don’t want Big Brother subsidising themwith my tax money, and fining me if I don’t give the insurance companiesbusiness. If the government thinks we should spend more on health care, it iswelcome to increase taxes. If it thinks private health providers are moreefficient than the public sector, the government is quite welcome to buy theservices from the private sector. But don’t bring in the extra bureaucracy ofprivate insurance schemes.

What I do object to is the governmentpropping up the private health insurance business with my tax dollar, andcreating a two tier ‘public’ health system in the process.