Taiwan shows the way in health insurance. John Menadue

I have spoken and written many times about the inefficiency and inequity of the taxpayer subsidy of $3.5 billion annually to the private health insurance funds in Australia. These funds favour the wealthy; enable some people to jump to the top of the hospital queue; they have administrative costs  three times those of Medicare; they weaken Medicare’s ability to control costs and through gap insurance they have facilitated the largest increase in specialists’ fees in a quarter of a century in Australia.

They have not taken the pressure of public hospitals .In fact they have made it worse by helping private hospitals pay vastly higher salaries to bid specialists away from public hospitals.

Yet the vested interests and private sector ideologues want to extend PHI and take us down the disastrous US path.

Taiwan however has shown the best way to go. It is so confident and proud of what it has achieved that it has taken advertisements in the latest edition of Foreign Affairs. Taiwan is about the same size as Australia with a developed capitalist economy.

The Taiwan Government has consolidated all health insurance into a single payer. The plan has improved the quality of health care with rising life expectancies and falling infant mortality rates. The public rates the success of the Taiwan Health Service at 80%.

Like all health systems, Taiwan has faced rising costs with new technology, new drugs and ageing, but it has contained costs effectively. Total health expenditure in Taiwan is only 6.5% of GDP, much lower than the median for OECD countries and Australia at 9% of GDP.

Based on the core principles of equity, quality and efficiency, Taiwan is showing that a single payer is the key to a top-class health service and is the best means to control costs. The worst course for Australia to take would be to encourage the proliferation of taxpayer subsidised PHI funds that fail on both efficiency and equity grounds. But if the PHI industry has its way Medicare will be under threat and we will start journeying down the US path of multiple private health insurance funds that are unable to control costs and ensure equity.

John Menadue


John Laurence Menadue is the publisher of Pearls & Irritations. He has had a distinguished career both in the private sector and in the Public Service.

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