As both sides of politics put forward their policy suggestions regarding the private health insurance rebate, little is actually being put on the table to provide Australians with an equitable health system. The Government is claiming it is a fundamental reform to boost equity, while the Opposition claim it will lead to an exodus from the private health system putting more pressure on public hospitals. Michael Janda calls on a host of experts as he explains that both sides are barking up the wrong tree if they genuinely want to see efficiency and equity in the health system.

Research by Mr McAuley and John Menadue published by the Centre for Policy Development reveals that Australians paid $16 billion into private health insurance funds and only got $13.2 billion back in benefits.

The balance went into administration, advertising and profit.

After factoring in tax, the report estimates that 16 per cent of premiums do not go back into healthcare provision, whereas Medicare’s running costs amount to less than 6 per cent.

Mr McAuley says that is not a criticism of how the insurers are run but simply the nature of their business.

“That’s not to say they’re horribly inefficient or gauging the public, it’s simply that’s the nature of the system; they’ve got to compete for customers, they’ve got to make profits on their reserves, they’ve got to hold reserves, they have to maintain front offices and really they’re adding no added value in health care,” he said.

Read the full article in Yahoo! 7 Finance here

Want some more information on the health care debate? Read John Menadue and Ian McAuley’s discussion paper Private health insurance: High in cost and low in equity

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