John Menadue. The health insurance lobby at work at the expense of the public interest.

Apr 11, 2016

For many years, Ian McAuley and I have been highlighting the damage to our health system and the Australian economy as a result of the $11 b. p.a. subsidy to the private health insurance industry.  We have highlighted the following and never has there been a rebuttal by these vested interests.

  • The subsidy favours high income groups. Taxpayers money is being used to help the more wealthy jump the hospital queue
  • Through gap insurance PHI has underwritten enormous increases in specialist fees.
  • Despite the claims PHI has not taken pressure off public hospitals. It has made it worse by attracting salaried staff from public hospitals to private hospitals with much higher remuneration.
  • PHI discriminates against country people who have limited access to private hospitals. Yet the National Party supports the subsidy.
  • Premium increases for PHI over the last 15 years have been at more than double the CPI rate.
  • PHI has administrative costs three times those of Medicare.It aggressively conducts pointless advertising campaigns and sponsors organisations such as  the Public Health Association of Australia and the most surprising of all the Grattan Institute.
  • The PHI industry talks about the high cost of health care but weakens Medicare’s ability to control costs.
  • PHI takes us down the disastrous US private health insurance path. Which Warren Buffett has described as the tape worm in the US health system?

Despite what I think is an overwhelming case against taxpayer funding of PHI I have not seen a serious response from the PHI industry…ever. I can only conclude that it has no confidence to defend its position, and if it attempted to do so it would open up a debate that it wants to avoid at all costs.

Instead of joining in a public debate to justify $11 b. p.a. government subsidy, it relies on lobbying directly and secretly on the federal government, both ministers and officials.

In 2007 Kevin Rudd made a secret deal with the PHI industry that a Rudd Government would maintain the taxpayer subsidy. We only learnt about it years later.

Now CEDA’s Balanced Budget Commission has suggested revenue measures which the government should consider to achieve a balanced budget.  One revenue measure it suggests is ‘removing the private health insurance rebate exemption’. The CEDA Commission also suggests ‘cutting the private health insurance rebate’. This CEDA report is professional and supported by a cross-section of very senior academics and public officials including four former heads of PM & C. But once again I expect the PHI lobbyists will try to close down the ‘debate’ as quickly as they can.

In so many areas of public life in Australia, vested interests are abusing their power and influence on government. It is a public scandal what the PHI industry has been doing at the expense of the Australian taxpayer and good health policy.  But it is not just health policy that is being corrupted; it is our democracy where vested interests exercise enormous and secret power.



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