Fluctuations between Private and Public Systems

Australian Social Policy: Health

Australian Healthcare Policy: Fluctuations between Private and Public Systems

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In Australia, one of the most politically divisive and publically discussed social policy domains is that of health. It has been an issue under discussion by political candidates at each Commonwealth election over the past seventy years due to the politically engrained differences in how the political parties have conceptualized managing the Australian healthcare system. These political divisions are in addition to the stakeholder positions that are usual to any healthcare system, with patient, provider, research, and insurance interests often having vastly different goals and motivations. Health policy in Australia is indeed reflective of the plurality of political parties and ideologies core to the Commonwealth’s legislature (Gray 2003). The political tensions around health are no small matter, either, with the healthcare industry being the largest industry in the Commonwealth (Duckett 1999).

In light of the political fluctuations and their impact upon policy development and change, a key resource for understanding the priorities and activities of the Australian government’s health initiatives is through the Australian Institute of Health and Welfare, which publishes over 100 policy and action briefings each year (Australian Institute of Health and Welfare 2011). Issues of access have remained central to the concerns of the nonpartisan Institute of Health and Welfare which handles public health, medical health, medical economics, bioethics, and health management aspects of the Commonwealth’s policy and action plan. One of the main subsections of the Institute’s website covers the issues of “Services, workforce, and spending” within the Commonwealth’s health plan and policy (Australian Institute of Health and Welfare 2011). In a report published in 2010, the Australian Government reported the following long-term trends with regard to per capita health expenditure (this should be seen as distinct from reporting on public health expenditure):

“Australia has been one of the first countries to adopt a newly developed international standard, the System of National Accounts 2008. The new System has increased the scope of production activities included in the measurement of GDP. The changes have increased the size of Australia’s GDP, which has had the effect of reducing Australia’s health to GDP ratio, particularly in comparison with other countries that have not yet adopted the new standard. Health expenditure grew from $48.4 billion (7.8% of GDP) in 1998-99 to $112.8 billion (9.0% of GDP) in 2008-09. In 2008-09 prices, this was a change from $66.5 billion in 1998-99 to $112.8 billion in 2008-09. (Australian Government 2010)”

These trends in Australian per capita health expenditure reflect that despite political tensions surrounding how much the Australian government ‘should’ be spending on per capital healthcare-related costs, the rate of expenditure nearly doubled in the decade between 1999 and 2009. This period of time saw a great deal of change and fluctuation in Australian healthcare policy, starting with a series of revisions to the Medicare policy and culminating in Australia’s response to the global recession and rising healthcare costs. The historical context of the political fluctuations within Australia and its impact upon the healthcare infrastructure and the policies of which is comprised is essential to the understanding of how the healthcare industry has become the largest and most controversial industry in the Commonwealth.

The Australian Labour Party has been the face of nationalized social medicine policy in the past several decades, operating from a perspective that healthcare is a protected right, for which the government is obligated to provide basic access. The platform position of the Australian Labour Party has been that publically funded healthcare is central to ensuring equitable access for all Australians. The other end of the political spectrum is represented in the Australian Liberal and National Parties, which function as a coalition with regards to healthcare policy position. The coalition favors a more libertarian stance on health policy development in Australia that minimizes the public sector in favor of privatized care (Palmer and Short 2007). The political pendulum has swung between these political parties and their respective political agendas, often influenced by social, cultural, and particularly economic factors. The resulting pattern of Australian healthcare policy reflects multiple changes in direction from a philosophical perspective, with social benefits related to healthcare coverage having changed multiple times in the past several decades (Gray 2003).

A chief example of the oscillation of Australian healthcare policy development is historically situated in the early postwar era. When a national hospital system was created in 1946, it collapsed with a lack of participation from Australian healthcare providers. By the early 1950s, with a new, more conservative administration in power, the nationalized scheme was abandoned in favor of private health insurance. The new private system was unpopular due to the financial reasons outlined as barriers to access as well as a lack of regulation on costs and premiums (Palmer and Short 2007).

In another swing of the pendulum of public opinion and political policy, a public healthcare and insurance coverage system was introduced in the mid 1970s, called Medibank This, too, proved unpopular and when the National and Liberal party coalition came into power, the system reverted to privatized care and coverage. Another public option was introduced in 1983. While Medicare has not been dismantled as other public healthcare systems in the Commonwealth, such as the 1946 Chifley system or Medibank, political pressures have influenced the degree to which the program has been funded over the past three decades (Gray 2003).

The current Medicare system is financed by the Commonwealth government and is managed by the Health Insurance Commission. It was established such that the Commonwealth and the constituent states Under current policy, Australian citizens are covered for all care pertaining to necessary hospitalization and care and up to eighty-five percent of out patient procedures, although with a bulk billing option, which has been a matter of some controversy, healthcare providers may opt to bill the Heath Insurance Commission directly instead of the patient (Australian Government 2011; Hall 2006).

The health policies since the advent of Medicare in the Commonwealth have impacted Australian health demography, with a steady decline in private insurance subscription rates to under one in three persons in 2005 (Gray 2003). Insurance lobbyists have, for the most part, been unable to sway the Labour Party to favor private insurance over public coverage and costs have held relatively constant, particularly compared to other developed nations. A notable exception to this stabilization of political debate occurred in 1999 when private insurance rebate was created but failed to significantly increase the number of Australians selecting private insurance coverage (Duckett 1999).

A more recent policy initiative that did increase the rate of private insurance coverage was a controversial but well-publicized health campaign, the Lifetime Health Cover, which placed upon Australian citizens over the age of 30 a surcharge for not electing to maintain private insurance coverage in addition to the Medicare coverage as previously outlined. In public discourse, the campaign, which carried a tagline of “Run for Cover,” was derided for instilling a sense of fear and financial penalty upon Australians and that these were unsavory incentives for driving people to private insurance coverage (Parliament of Australia 2000).

In response to public and political outcry over this and the bulk billing debate, prior to the 2004 elections, a comprehensive reform policy, “A Fairer Medicare” was introduced, although neither public nor industrial interests supported the final product. A revision, “Medicare Plus” was crafted with bipartisan participation following the creation of a special legislative committee and reformatted the payment structure for physicians using bulk billing as well as providing better coverage for vulnerable populations. This rapid sequence of events, following several years of relative stability following the initial passage of Medicare was widely attributed to the Labour government’s concerns in the lead up to the 2004 general elections (Australian Institute for Primary Care; 2003; Hall 2006).

One element of policy development that shifted with the activity surrounding the 2004 Medicare revisions was that there was a greater degree of involvement in the process from academic and public stakeholders. The government commissioned multiple reports from the Australian Institute for Primary Care and also held multiple public hearings in order to determine the successes and failures of the Medicare program on the general population (Essue 2010).

There have been many factors in the past decade in particular which have exerted tremendous influence over the current trajectory of Australian healthcare policy. The global recession affected Australia as well, and with healthcare occupying more than five times the budgeting capacity of even the defense budget in the modern world, the healthcare industry has been hit as well (Haynes 2011). Along with other countries with private health insurance Australia has experienced rising healthcare costs. There have been substantial lobbying efforts from insurance and healthcare provider interests to prevent healthcare reform efforts such as capping copayment consumer premiums. From the social, liberal platform of the Labour Party, the insurance premium policies impose financial hardships on low-income Australian citizens and jeopardize the mandate for universal basic healthcare access (Gray 2003; Haynes 2011).

There are some elements of Australian health policy that are beyond the scope of the political partisanship that typifies the contemporary Commonwealth government. Matters of inflation with regard to healthcare costs are tied to the Australian and global economic situation. There have been some studies that indicate that single payer systems, such as was erected in Australian briefly in the mid 1940s and again in the early 1990s, have been demonstrated to curb the effect of inflation and economic duress (Gray 2003; Ross 2005). As was previously outlined, however, since the first series of reforms on the Medicare system in Australia, the policy initiatives, such as Lifetime Health Cover have favored moving in a multi-payer direction. While there are few serious calls for the total dismantling of Medicare or its constituent parts, the insurance lobby has demonstrated some success in impelling the government to pass legislation which funds health campaigns that incentivize privatized insurance coverage or penalize those who do not obtain secondary private coverage (Ross 2005).

The emerging financial restriction in the current system has underscored that access issues are not limited to patient burden. There has been an issue of staffing in the rural areas of Australia for decade, particularly in the Outback and amongst indigenous populations. The National Rural Health Alliance has been an important policy partner in the matter of resource and practitioner shortages for many years (Australian Government 2010, 2011).

The government has increasingly moved in a direction of defraying rising costs by chipping away at the initial cost structure under Medicare where all hospital-related costs and more than half of non-hospital related costs were covered by the Commonwealth and the states. With an increase in surcharges, co-pays, taxes, and billing, a concurrent issue of access has re-emerged, with criticisms of the current system suggesting that it disproportionately reduces access to basic healthcare for lower income and vulnerable populations in Australia (Gray 2003; Ross 2005).

The social ramifications of Australia’s fluctuating healthcare policies have been most acutely felt by vulnerable populations, such as low income and rural populations. The continued efforts from the Labour party to move toward socially-responsibly, single payer public healthcare coverage have been gradually successful on a cyclical basis in step with changing social and political values in the Commonwealth (Jamrozik 2008). It remains important that the increases in per capital expenditure by the government upon healthcare are a sign of increased coverage rather than a symptom of increased cost in order to assure the mandate of universal basic access to healthcare that is part of the Labour party platform and part of a concept of Australian healthcare oriented from a social welfare perspective.


Australian Government. (2011) “About Medicare Australia” Retrieved from: http://www.medicareaustralia.gov.au/about/index.jsp

Australian Government. (2011). “Private Health Insurance Administration Council.” Retrieved from: http://www.phiac.gov.au/statistics/membershipcoverage/hosquar.htm

Australian Government (2010). “Health expenditure Australia 2008-09” Retrieved from: http://www.aihw.gov.au/publication-detail/?id=6442472450&libID=6442472431

Australian Institute of Health and Welfare. (2011). “Services, Workforce, and Spending” Retrieved from: http://www.aihw.gov.au/services-workforce-and-spending/.

Australian Institute for Primary Care. (2003). “An analysis of potential Inflationary effects on health care costs for consumers associated with the Government’s ‘A Fairer Medicare’, and the Opposition proposal” Retrieved from: http://www.aph.gov.au/senate/committee/medicare_ctte/fairer_medicare/report/f02.pdf

Essue, BM, et al. (2010). Informal care and the self-management partnership: implications for Australian health policy and practice. Journal of the Australian Healthcare & Hospitals Association. Vol 34, Iss 4: 414-422

Gray, Gwen (2005). The Politics of Medicare. UNSW Press; New South Wales.

Duckett Stephen (1999) Policy challenges for the Australian health care system. Australian Health Review Vol 22. 130 — 147.

Hall, J. (2006). “Incremental change in the Australian health care system.” Health Affairs, Vol. 18, Iss. 3, 95-110.

Haynes, AS et al. (2011) “From ‘our world’ to the ‘real world’: Exploring the views and behaviour of policy-influential Australian public health researchers.” Social Science & Medicine, Vol 72, Iss 7: 1047-1055.

Jamrozik, Adam. (2008). Social Policy in the Post-Welfare State: Australian society in a changing world.

Palmer, GW and Short, SD. (2007). Health care & public policy: an Australian analysis. Macmillian: South Yarra, Australia.

Parliament of Australia. (2000) “National Health Amendment (Lifetime Health Cover) Bill 1999. Retrieved from: http://www.aph.gov.au/library/pubs/bd/1999-2000/2000bd013.htm.

Ross, Jayne. (2005). “The use of economic evaluation in health care: Australian decision makers’ perceptions” Health Policy -Vol. 31, Iss. 2: 103-110.

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