Catholic Health still leaves the impression that it wants to destroy Medicare. Joint Blog: John Menadue and Ian McAuley

May 30, 2013

On Mar 14 John Menadue wrote, on this blog site “Does Catholic really want to destroy Medicare”.  Martin Laverty responded on 29 May.

This is a further response by Ian McAuley and John Menadue. Together we have written many joint articles on health policy. See

Catholic Health’s response through Martin Laverty identifies two problems with our present health care funding – inequities in health delivery and outcomes, and fragmentation of funding and care between Commonwealth and State Governments.

Catholics Health’s proposed solutions to the two problems  are well off the mark, however, and their response – tailored health plans for the most disadvantaged and adoption of “Medicare Select” does not address the core issue identified in the original article “Does Catholic Health really want destroy Medicare?”  The core issue is avoided in the Catholic Health response. That issue is that if the 50% of Australians who have private health insurance took up the option under Medicare Select to transfer their $30 billion  plus entitlements  per annum in Medicare to their private health insurance it would be goodnight Medicare There is no doubt about it. Even a withdrawal of a lesser amount would still be crippling.

It is understandable that Catholic Health should be concerned with the most disadvantaged. Martin Laverty must be well aware of what has happened in the USA, where hospitals under the umbrella of the Catholic Church, such as those nominally operated by the Sisters of Mercy, have become big profit-making enterprises with little if any connection to their original mission.

But turning over Catholic hospitals and other facilities to provide care for the “most disadvantaged” is fraught with the curse of unintended consequences.

There is an obvious appeal in directing such services to those most in need, but a system  reserved for the poor, or the “indigent” to use the US term, degenerates into a charity ward system. Catholic hospitals would become the hospitals for “losers”, for those without voice, and without the political influence to pressure governments to provide public facilities and public funding for all. The poorly funded US “Medicaid” provides a strong lesson we should heed.

Whatever our means, we can all retain our dignity when we come through the same door to the same hospital or clinic.  There is merit, also if we pay for those facilities according to our means. Means-tested co-payments are a far more dignified way of achieving equity than provision of separate facilities. Perhaps Catholic Health can take guidance from Pope Benedict’s encyclical letter Caritas in Veritae  which stresses the virtue of civic solidarity, rather than segregation of society along a division between a supposedly self-reliant class and an indigent underclass.

We have examined Medicare Select each way and every way and are still at a loss to understand Catholic Health’s enthusiasm for it – a proposal which has far more to do with entrenching high-cost financial intermediaries in the health system than with providing care or meaningful choice.  As stressed in  the original article of May14, it involves churning funds once through the tax system and then again through private insurers, offering “choice” when we have hardly any idea what our future health care needs will be.

There is a strange contradiction in Catholic Health’s argument. It puts the case for a single funder – a strong case in our opinion – and then in an unexplained twist uses it to support a proposal where funding would pass through a plethora of financial intermediaries.

The problem with Medicare Select is not that it’s “too radical” as suggested by Martin Laverty. Rather, it builds on a method of health-care funding, private insurance, that has demonstrably failed to contain costs and is inequitable. Just look at the disaster in the US.

In defence of Medicare Select, Catholic Health refers to the Netherlands system, which, it is claimed, is operating successfully. The “success” of the Netherlands system has become an article of faith among those who see every retreat from public funding a success, regardless of the outcome.

In fact, since the Netherlands compulsory private insurance system was introduced in 2006, health care expenditure has risen sharply – from 9.7 per cent of GDP in 2006 to 12.0 per cent of GDP in 2010 (the Netherlands Government is yet to provide later figures to the OECD).  That’s the second-highest in the OECD – only the USA, where private insurance has had a longer period to wreak its damage, is expenditure higher, at 17.6 per cent of GDP.  To put Netherlands’ rise into perspective, if our health expenditure were to rise by 2.3 per cent of GDP we would be outlaying another $35 billion a year. That would be a high price to pay for expanded overheads and a dubious “choice”.

Evaluations of Netherlands post “reform” health care arrangements point to anything but success. An evaluation published in the Journal of Health Politics and Law found opposition from both the public and health care providers, a failure by insurers to negotiate with providers (a common problem when providers can play off insurers against one another), and poor profitability among insurers, even though their premiums were rising steeply.  Another evaluation in the same journal found that while the new private insurance model offered more choice of insurers, the former Bismarkian system, to which 60 per cent of Dutch had belonged, offered more choice of providers. Kieke Okma of Leuven Catholic University says of the “reforms”:

Originally presented as a means to help contain costs, the government now seems to see competition in health care as a goal by itself. While earlier reform documents emphasize goals like improved quality of care, innovation, efficiency, cost-effectiveness, and patient satisfaction, those elements receive less attention as competition has taken the front seat.

If Catholic Health is seeking a European model of health care, it may turn its attention to Sweden, a country with strong traditions of Christianity and social solidarity, where the right-leaning Government has now wisely maintained the government as the single health insurer, but has introduced compulsory (and uninsurable) patient co-payments, and has encouraged the private sector to expand into service provision, including operation of private hospitals.

It’s not hard to see our Catholic hospitals fitting into such a model – a model which would secure their strong role in the community, and allow them to provide their distinctive services – not just to those who can afford private insurance, as is the case now, and not just to the poor, as is their other vision, but to all Australians

But Martin Laverty proposes something fundamentally different. Does the Stewardship Board of Catholic Health really want to go down the path he proposes?

John Menadue and Ian McAuley

References (not available on line)

Pauline Vaillancourt Rosenau, University of Texas, Houston and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands “An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System” Journal of Health Politics and Law  Vol. 33, No. 6, December 2008


Kieke G. H. Okma, Catholic University, Leuven, and New York University “Learning and Mislearning across Borders: What Can We (Not) Learn from the 2006 Health Care Reform in the Netherlands?” Commentary on Rosenau and Lako Journal of Health Politics and Law Vol. 33, No. 6, December 2008


The Economist (Schumpeter column) “A hospital case: Sweden is leading the world in allowing private companies to run public institutions” The Economist 18 May 2013

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