JOHN MENADUE Vale John Deeble – an architect of Medicare

Oct 13, 2018

Every Australian owes a great debt to John Deeble who died this week in Canberra, aged 87.  Together with Dick Scotton he provided Gough Whitlam from 1967 onwards with the essential advice on how to establish a compulsory public insurance health program – Medicare.  The result was Gough Whitlam’s triumph in government on 7 August 1974, in a joint sitting of the parliament, to establish Medicare.  The scheme started on 1 July 1975 when Medicare cards were issued to all Australians.

We now have one of the best health schemes in the world, although it clearly needs renovation.  Without John Deeble it is hard to visualise how Medicare would have been possible.

In opposition Gough  Whitlam was always exploring new policy options for Australia across a whole range of activities.  He had naturally been attracted to the success of the British National Health Service but a similar health program in Australia  at the federal level with the direct employment of doctors and nurses was really out of the question because of the conservative majority on the Australian High Court in the interpretation of the Constitution.

So Gough Whitlam welcomed the meeting with John Deeble and Dick Scotton in Melbourne because it offered a potential way around the constitutional barrier by offering a public health insurance scheme.

Gough Whitlam was also attracted by John Deeble and Dick Scotton because they were both health economists and understood the costs and economic consequences of a new health scheme.  The Department of Health at that time,  like the department still in Australia today, lacked competence in health economics.

John Deeble was an academic in Melbourne who had heart-felt concerns about the social and personal costs of poor health in the community.  He was forthright about  social injustice in health.  He was also realistic about the messy world of politics and the compromises that Whitlam and later Hawke had to make.

After the establishment of Medicare by Whitlam and Hayden in 1975, and its wind back by the Fraser Government, it was reinstated by Hawke and Blewett in February 1984.

John Deeble continued to advise governments on health policy.  He was a Commissioner of the Health Insurance Commission (Medicare) for sixteen years.  Because he was interested in health data and health economics he was the founding Director of the Australian Institute of Health and Welfare.  From 1989 to 2005 he was Senior Fellow in Epidemiology and Adjunct Professor in Economics at the National Centre for Epidemiology and Population Health at the ANU.

Until his health deteriorated, I spoke to him regularly and sought his advice.  I recall two particular concerns and interests he had.

The first was that the growth of government-subsidised private health insurance was a looming threat to Medicare.  But he did have pleasure in savouring the ever-growing public subsidy for PHI  so that at an appropriate time it could be transferred, with minimal political risk, to other important parts of the health sector.

The second was that the ALP had made little contact with him in the last decade or so when he clearly still had so much more to offer.  The failure to properly consult John Deeble explains, at least in part, why the ALP’s health policy has continued in the doldrums for so many years.

The country boy from Donald in Victoria has given great service to Australia.  He designed, implemented and then defended Medicare for over 50 years.

See below  edited extracts from an article I wrote in 2005, the 30th anniversary of Medicare. It highlights the important role of John Deeble.


Down a different path in Melbourne: how Medibank was conceived

It was hard-going developing policies in Opposition, particularly for a reform party out of power during the long Menzies ascendancy. The task was made harder in Australia, with our written Constitution interpreted for many years by a conservative High Court.

A historic meeting

Health policy was no exception, but a turning point came on the night of 6 June 1967, at the home of Dr Moss Cass in Melbourne. Cass was among the most farsighted and perceptive thinkers on health policy that I have met.

As Gough Whitlam’s Chief of Staff in an office of only three people in the mid-1960s, I had been building up groups of people who could advise him on a range of issues, such as education, science, housing, transport and health.

Professor Sol Encel was my chief collaborator in building these groups. He was Reader in Political Science at the Australian National University at the time and later became Professor of Sociology at the University of New South Wales. Encel suggested Cass as an adviser on health policy. Cass had written an influential Fabian Society pamphlet on health policy and advocated a national health system founded on public hospitals and health centres staffed by salaried doctors.  That was also the direction Whitlam intended to go until he met Deeble and Scotton

In 1967, the ALP’s election prospects seemed as bleak as the midwinter night when Whitlam and I rang Cass’s front door bell.

Cass had also invited Dr Rod Andrew, Foundation Dean, Faculty of Medicine at Monash University, who had been a public advocate of more salaried staff in hospitals. Also pre­sent was Dr Jim Lawson, Superintendent of the Footscray Hospital, who was described by Cass as having a view that there were too many hospital beds, and that they should be used more efficiently and with greater emphasis on care in the community. Dr Harry Jenkins, the ALP spokesman on health in the Victorian State Parliament, was also present. However, the key attendees. were two young researchers from the Institute of Applied Economic Research at Melbourne University, John Deeble and Dick Scotton. Deeble had previously been Deputy General Manager of the Peter MacCallum Clinic in Melbourne.  Scotton had   been economist at the Commercial Banking Company in Sydney and doing ground-breaking research at Melbourne University on the pharmaceutical industry, hospital costs and compulsory and voluntary health insurance.

A scheme of universal health insurance

From that 6 June 1967 meeting, Deeble and Scotton developed a universal and compulsory health insurance scheme to be funded by a tax levy. It was clear that the Liberal-Country Party Coalition Government’s voluntary health insurance scheme, supported by taxpayers’ funds, was wasteful and inequitable and that an alternative was needed.

In May 1968, Deeble and Scotton distributed their first major paper, ‘A scheme of universal insurance’ (unpublished paper, Institute of Applied Economic Research, May 1968). Whitlam used this academic treatise as a major input in his own policy development. In July that year, 13 months after the meeting at Cass’s house and almost five years before he became Prime Minister, Whitlam outlined The alternative national health program (called “Medibank”, and later “Medicare”), which was  to become so much part of Australian national life. The Deeble and Scotton ideas became a practical and political program. Once again, rigorous  policy development and a compelling Whitlam speech became party policy

After June 1967, major health reform was to go down the Medibank compulsory insurance route rather than the funding of hospitals and related services that Whitlam had in mind. Medibank would prove simpler to explain and implement. It was also a more likely political winner.

Voluntary versus compulsory health insurance

While developing reforms based on hospitals, Whitlam had been persistently criticising the shortcomings of voluntary health insurance. He had asked many questions on notice in Federal Parliament since the early 1960s about the high cost, high reserves and limited coverage of private health funds. We were of the view that, on a per capita basis, the total cost of the Australian health system exceeded by a large margin the cost of the NHS in the United Kingdom, but we were finding it hard to prove. We could identify the Government’s health costs, but the additional costs to individuals, either directly or through their health funds, were hard to pin down. We suspected that the higher costs in Australia were due to the inefficiencies of the health funds and the perverse financial incentives inherent in fee-for-service, which encouraged over servicing and overprescribing.

So when Whitlam met Deeble and Scotton to discuss their new approach to health insurance, he was very receptive, although I recall that the 6 June meeting was slow to begin, with Whitlam’s eyelids drooping a few times. But his interest sparked up dramatically when Deeble and Scotton explained that in their view a compulsory and universal scheme would be cheaper than existing arrangements. There· was thus the exciting prospect ahead of a health scheme that was both universal and also politically defensible as to its cost.

Whitlam’s critique of voluntary health insurance, supported by the work of Deeble and Scotton, was confirmed by Justice Nimmo in his 1969 report. (The Coalition Government had established the Nimmo inquiry into health insurance to try to pre-empt the findings of a Senate committee which was reviewing health insurance.)

There was a long and bitter campaign from that midwinter night in Melbourne in 1967 to spring in Canberra in 1975(when Medicare was introduced). No government will now seriously tamper with the compulsory and universal health insurance scheme. The area of concern and debate for the future will not be so much about funding of Medicare, but rather about how we improve the delivery of health services.

See ‘John Menadue. 30th anniversary of Medicare.’ For the full article.




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